Hi David. Love your videos - I wish I’d know about them earlier. I’m just confused about something. If you take a break after 12 months of a salary increase then that will lock in that year - but would it be more beneficial to take a break after three consecutive years of the higher salary, thus locking in three consecutive “big” years?
@dfountainСағат бұрын
Yes, this is a tricky one to predict. Locking in a Method A is a more difficult decision than considering the method B as it has to be done quickly, a decision taken at the end of the year and not up to 8 years later. The key point to consider is whether your current salary is going to increase by more than inflation or not over the next year and then the year after that. Any time the salary increases by more than inflation then you will have locked in a lower salary than you would have had the following year and so makes it pointless. The trouble here is that you don't get to know what inflation is going to be for nearly half of the financial year until 13 months later. This makes it virtually impossible to assess whether your current Method A, the current salary, is going to be better than next year's or not. The advantage of locking in the Method A is that it will be increased by inflation. This makes it worth more than next year if the pay rise is less than inflation. If you can foresee 2 years ahead then you may decide that not opting out to keep the Method A but allowing the next two years to combine with it to give an average of those as a method B may be wiser. The advantage of doing that is you then have 3 of your most recent years used as a method B and you wouldn't need to opt out for a further 7 years to keep them since they last for 10 years anyway. Back to the Method A then with an example or two. Example 1. Your salary this year is £50,000 (Method A) 2023/24. You are getting a 5.5% pay rise. If inflation is going to be 2% then a "locked in" Method A would be worth £51,000 in a year's time The pay rise though would be worth £52,750 in a year. Conclusion opting out to preserve the Method A would not be worth it. Example 2. The salary in the following year is £52,750 (Method A) 2024/25 You get a 2% pay rise Inflation is 3% After a year the new salary would be worth £53,805 But a locked in Method A from Sep 2025 would be worth £54,332. (Note that the average Method B from the 2 years you would have in at that point would be the average of £52,530, £54,332 and £53,805 - the three years to that point with inflation of added to the first two, giving £53,556)
@jw6117Күн бұрын
Thanks David, your videos are so helpful - much appreciated. My method B best three years were 2014-2017. I am going to take a months break but didn't get my act together to start that on 1st August. Should I just do that as soon as possible (Sept if I can) or is there a particular month this year that is more beneficial? - March or next August for example? If you got the chance to answer this query that would be great.
@dfountainКүн бұрын
The best time is before it falls any further, this will happen when you get into the month listed as being the start of your 3 years, most likely September 2014. You have to opt out for a calendar month and this should be taken as the next calendar month after you submit the opt out form. Submit it now, in August, and they should take you out for September but if you waited until 1 September to send in the form then that should take you out of October.
@jw6117Күн бұрын
@@dfountain yes, the start of my best three years is Sept 2014 so opting out for the month of Sept is not as good as opting out for the month of August but as the ship has sailed for opting out in August I should just do it ASAP
@johnporcella23753 күн бұрын
Sorry, but what is Method B? Also, you mention Final Salary a lot. I thought teachers were on Career Average, so not sure of the relvance. For teachers on Career Average, howndonthings change, if at al?l
@peterkeeley89974 күн бұрын
Regarding the financial year rule, is it correct that if you took your pension in say September 2024, continued working until 31 August 2025, you are likely to avoid abatement as it would not be a full year's pension plus salary in each tax year that is compared to the full time equivalent salary?
@dfountain4 күн бұрын
The first financial year, 6 April 2024 to 5 April 2025, that includes the pension being taken in September 2024 could well be hit by the abatement since you would be working full time for those 12 months. The second financial year, starting on 6 April 2025 is far less likely to have a problem since the salary would only be 5 month's worth, so even if you were working full time the total amount you would receive from the salary would be under 50% of a full time, full year, wage.
@peterkeeley89973 күн бұрын
@@dfountain Thank you David, I was wrongly assuming the clock started only when you took the pension.
@dfountain3 күн бұрын
@@peterkeeley8997 It is in proportion, so starting on 1 September the limit will be 7/12ths of the revalued salary of reference assessed against 7 months of the salary and of the pension combination.
@timpala58415 күн бұрын
Thanks David - can you advise how I go about opting out for one month and then rejoining? Thanks.
@juliemayo73635 күн бұрын
David I am in a phased retirement was wondering if you could ask a question I am in transitional payments I have not had a remedy but am now .6. Will this have any effect on my payment due to not having the remedy as yet.
@dfountain5 күн бұрын
The part you have taken as "phased" is not affected by subsequent pay rises. This can only have an impact on the parts of the pension yet to be taken.
@juliemayo73635 күн бұрын
@@dfountain thank you.
@craigyoung56156 күн бұрын
Great and informative video as always. Quick question, does the extra retrospective pension also then get added to lump sum? So if you apply for 4 blocks of £250 for £1000 pension, you will also get 3 x £1000 into the lump sum?
@Taiwaiting10 күн бұрын
Hi David , I have just opted for AP the highest block (8,500). Over 15 years. This does mean around £800 more monthly deduction. But I can afford to do so as I have finished paying my mortgage. I’m 37 this year and plan on leaving teaching just after 50! Can I just clarify, if I completed the 15 years and chose to retire, would I see the benefits? Or should I have to wait until 65?? Either way, paying the extra does offset me from higher tax and child benefit isn’t affected. I’m not losing anything am I? Thanks. Great videos too! Keep it up!
@Thaitanium7311 күн бұрын
It's an interesting way to look at it, however because of the extra years worked accruing extra pension, then the person taking the pension at 60 would catch the person who retired at 55 in the first quarter of the 5th year of retirement, they would then continue for the remainder of their life having a pension income 48.43% greater than the other (£7,750 in this example without taking in to account index linking). People just need to decide what works for them, and not get bogged down with gains and losses.
@dfountain11 күн бұрын
Well no, a salary for those extra years would instantly result in a greater income than taking the pension so the total income for a person who carries on working and adding to their pension will have had a greater total amount paid into their account by 60 and, of course as you say, have a larger pension. What they haven't had is those extra years of being in charge of what they "spend" their time doing. I agree totally with your last sentence, the essence being to consider the whole picture where you are balancing "time" and "money" to give you what "works" for you.
@Andyporter-g6t13 күн бұрын
What a fantastic video! Thank you very much. I earn £63k with the recent 5.5% uplift in teachers pay. As such, I assume I am paying approx £7k at 40% tax. I’m 43 years of age. As such, if I wanted to maximise tax efficiency, is the process as simple as me asking teachers pensions to add on three blocks of £250 a year at approx £7.1k (deducted from my monthly salary). Thanks for your help.
@dfountain13 күн бұрын
www.teacherspensions.co.uk/forms/flexibilities.aspx You have to pay either with a lump sum or over a period of "years". As such you might want to work out how much you need to pay between now and 5 April and then juggle the monthly payments etc to get them to add up to the amount you need to pay to avoid paying the 40% income tax. Remember there are other pension products available outside the TPS - hence the need, I would suggest, for getting properly qualified financial advice.
@ShameyBaby3 күн бұрын
Just to echo what David was saying, I’d definitely look at other products before paying more into the TPS. I have an S&S ISA and a SIPP to give me flexibility on access to my cash.
@Solgoodman8514 күн бұрын
Thanks so much for this info David. Yet to receive my letter from TPS. Can I still buy AP if my school moves away from the scheme before receiving the letter? Or is it possible to still apply even if I’m not an ‘active’ member?
@dfountain14 күн бұрын
Yes, everyone who was illegally denied the opportunity gets this no matter if they have already retired, still working or have just left teaching. The only thing that prevents this is if you have had already taken the pension and, after getting your RSS, have made the choice of Option 1 or Option 2 for the remedy period.
@Solgoodman8514 күн бұрын
@@dfountain thanks for replying David. Much appreciated
@christownsend146017 күн бұрын
Hi David, am i right in thinking that if my earnings are now at a higher level than a previous peak 8 yrs ago, then a break is not necessary? I am 50 now and intend on reducing my hrs to 80% for the next 5 years before leaving teaching. From 2016-2019 were my highest earning years peaking at 44k, earnings now from sept 47.3k full time. Intend on starting part time 80% from Jan 25. Thanks for highlighting the loophole and i hope my question makes sense. Thanks
@dfountain17 күн бұрын
You do need to be careful in assessing what the "target" was back at the time of the break, that is the value in 2016, 8 years ago. That would use the revalued salaries from 2006 to 2016 and as such could produce a higher salary than any that you were actually paid. This sheet can help you work out what you need to "compare". docs.google.com/spreadsheets/d/1GUB2WnLHm2LFmPPv6ihwMvL7VVtQLALd8Zcf58-GnZ0/edit?usp=sharing
@christownsend146017 күн бұрын
@@dfountain haven’t taken a break yet but I’m thinking of doing it now before going part time👍
@dfountain16 күн бұрын
@@christownsend1460 Sorry, I misread that. 44k in 2016 would now be equivalent to £57,780 - ensuring you check the value of those older salaries and act if necessary to protect them is the key. This may help you find that out: kzfaq.info/get/bejne/mdCep7CLl8q7Yok.html
@christownsend146016 күн бұрын
@@dfountain thanks
@misshoney1118 күн бұрын
Hi David this looks super helpful - I am in Scotland; do you have anything for Scottish Teacher Pension statements? Can't make head nor tail of it! Thanks, Michelle
@kevink146322 күн бұрын
Another great video - might have missed this but how is the tax relief obtained as current HRMC rules state you can only claim tax back for 4 years so claiming from 01/04/2015 would not lead to a claim for the 20% back from HRMC? Do TPS reduce the amount to pay by 20% (which seems unlikely)?
@dfountain22 күн бұрын
Yes, the TPS, and all schemes affected by the illegal blocking of access to such voluntary extra contributions, have to reduce the costs by the amount of tax relief that would have been paid at the time. The legislation was written to do it this way so as to avoid putting an extremely heavy burden on HMRC who otherwise would have to re-open the tax accounts of potentially millions of taxpayers over each of the 7 years involved. The TPS assess the tax that would have been paid by the teacher using their salary records that they already hold. As such it is possible for tax relief at the higher rates to be accounted for as well. If an individual believe the calculation should have taken account of other income then they can write back to the TPS when they get their calculations/invoice with an explanation and evidence that more relief should have been applied.
@kevink146322 күн бұрын
@@dfountain Thank you - have to consider what to do now then.
@JackieHarris-q2o26 күн бұрын
What about those of us in NPA65 ? Is it possible for us to buy more pension and if so how / how much?
@dfountain26 күн бұрын
Yes, so long as you have "transitional protection" then you were also, illegally, denied the opportunity to buy AP in the NPA65 final salary scheme. This sheet is one I knocked together for the NPA65 AP: docs.google.com/spreadsheets/d/1jU3Tw-NaD4JXGTIHIshUzK_xHpjMpY1Jp64V3A1h5IM/edit?usp=sharing
@JackieHarris-q2o26 күн бұрын
@@dfountain I joined the scheme in August 2007 full time with no breaks in service, although I've just done one month opt out of TPS to preserve best salary (2014-1017). As I understand it I could buy 10 blocks max of AP???
@pennywoodcock511626 күн бұрын
Hi thanks for your videos TPS should be paying you! In my service history table some dates appear twice with one row in blue... any idea what this means? Thanks
@dfountain26 күн бұрын
The blue rows are "summary" rows but the way they were introduced was a little piecemeal and as such you can have a "summary" of just a single row at times. The concept, and what is mostly happening now, is that you get a new row (grey) for each separate month. This makes it easier to match up the values with your monthly pay slips and therefore be able to identify errors sooner. Then a summary row will span several months, or even a full year. However, when it was introduced the requirement to submit monthly data returns was optional. So you have many rows with no summary, early in your career, and then it is possible to have a variety of summary lengths.
@MatthewKing-dk2li27 күн бұрын
Hi really appreciate this, just don't quite understand the limits as to how many additional block I am allowed to buy? (assuming any HMRC rules on recycling are followed) On the face of it seems a no brainer, but unsure of how to calculate how much I am allowed to purchase/max lump sum i can contribute? I qualify from 1/4/2015.
@dfountain27 күн бұрын
The limits change each year though they are cumulative, so you cannot buy the maximum of £6,500 from 2015/16 and then another £6,500 in 2016/17. The list of limits is here: www.teacherspensions.co.uk/members/resources/forms/updates.aspx
@jamescovell137921 күн бұрын
@@dfountainCan we be absolutely certain the final salary maximum was £6500 in 2015-2016 and 2016-2017? The link above only gives a career average figure for this period and then quotes £6400 for the final salary scheme in 2017-2018
@dfountain21 күн бұрын
@@jamescovell1379 Not certain at all! I have just found the guidance document for 2014-15 that says it was £6,200 for that year. Effectively that means £6000 as you have to purchase it in blocks of £250. However, we are interested in the following year. The increase is related to inflation but given that we know the limit the year before was £6,200 and then, two years later, is £6,400 in 2017/18 then the effective limit is likely to be £6,250 given the requirement for it to be in blocks of £250.
@jamescovell137921 күн бұрын
@@dfountainMany thanks David. I'd been working on it being the case that the maximum additional final salary pension I could retrospectively purchase would be £6250 relating back to this era.
@dtomeg692Ай бұрын
another great video. can you just clarify the death bit? Ie if you dont take the max lump sum does the potential extra lump sum amount you can get at retirement get paid back to your spouse or whoever when you die...or is it just lost? many thanks _hope that makes sense what I'm asking! if you lose it when you die then surely it makes sense to get max tax free amount? I presume I just keep checking this to see if there is a reply? many thanks in advance!
@dfountain29 күн бұрын
There is a complete separation between what you, as the teacher, gets and then what your spouse gets when you die. One has no impact on the other. If you take the max lump sum and smallest annual pension OR you take the normal lump sum and the largest annual pension it makes no difference as to what your spouse gets as their "survivor's pension".
@louisecheeseman9212Ай бұрын
Thank you for your very informative videos. I have now been told by the TPS via their messages that you can only make ONE application for retrospective additional pension. Is this true as far as you know? This is not what it says in their notes with the paper form on "How to complete the Application form" for retrospective additional pension. I have been waiting 6 months for a response to my application, sent Feb 2024 and have been told they are unable to give an exact timeframe but I will hear in due course. I would have requested to purchase a different amount of retrospective additional pension if at the time, paying monthly had been an option, as I'm still teaching and if I had known you could only make ONE application. Any advice?
@dfountainАй бұрын
They appear to have added this condition and I can understand the logic behind it. The option to apply for retrospective AP is based on the premise that you would have done it at the time but were denied the opportunity because of the illegal actions of the Government. Once a teacher has been made aware therefore they would be able to make this claim and there is no reason that they wouldn't know at this point what they "would" have applied for back at the time it was denied. However, it is also, in my opinion - so with no legal weight or qualification, likely that a teacher might have made applications over a period of years, one in 2016 then another in 2017 etc. That they were not making it known that there was going to be a monthly payment option is certainly grounds, I suspect, to cancel the application being made if it was based on what you could have afforded via the only option offered at the time, that of making a single lump sum payment. It may require some complaining and possibly appeals to the DFE and Ombudsman but the bottom line is that you should not be disadvantaged by the illegal actions of the Government.
@louisecheeseman921229 күн бұрын
Thank you very much David
@roberthuntley1090Ай бұрын
OFF TOPIC BUT PENSION RELATED - I would be grateful if you could provide some guidance about the small reduction in payments that occurs when you reach state pension age (I understand this only applies to service before April 1980). Background - A friend & I started on the very same day as apprentices in 1976, but he's been quoted a £18 a year deduction when he reaches state pension age, while mine is a third of that at £6.09 a year. Mine was quoted on 2015 when I took early retirement, his was in 2020 when he reached 60 so there may be a CPI related difference, but not of that magnitude. Just wondering how such a big delta is possible, when our pre-1980 careers were so similar. (I can't remember whether the apprentice wage was age related, but since I'm 6 months older why is he facing a bigger deduction than me). His wife started work a couple of years earlier in non-public sector job, and is facing a £400+ a year deduction so more significant. All seems very random rather than calculated. Thanks in advance ON TOPIC - Still waiting for my Remedy Letter, understand that it should be here before next April. Thanks for helpful videos on the subject. I only worked for a couple of months after April 2015 (retired on 1st June), so not expecting much of a difference between the two schemes.
@JadeWilde-f5kАй бұрын
Hi David, so useful and much clearer than the TP calculators. I'm trying to work out how best to invest some extra pay this September. I've been part time since 2014 so only have 8 years accrued. This year I go back full time on bottom of L scale. I'm 48. I don't have a lump sum but wanted to put my new income straight on pension to make up for missed years while parenting. It sounds like AF might be better for me? Very grateful for any thoughts you have. Many thanks for taking time to make these videos.
@ctfm938Ай бұрын
If you're increasing your annual pension does this affect your FS lump sum?
@dfountainАй бұрын
Additional pension does not impact the automatic lump sum but you can "sell" some of it when you retire for the optional lump sum in the same 12-to-1 ratio.
@ctfm938Ай бұрын
@@dfountain 1 to 8, 1 to 12 out. Interesting 😄
@dfountainАй бұрын
@@ctfm938 You can only "sell" 25% though.
@dtomeg692Ай бұрын
hi David, so just to clarify the salary of reference is a fulltime one, even if you have only been working 0.6 for 10 years plus? so I shouldn't then have to worry about abatement? Also if I retire a few years after taking my final salary pension, will my pension change and reduce as my final salary would be lower? thanks so much for your help. seems no-one else out there ...are independent advisers to be recommended? they offer free consultations but makes me wonder what is therefore in it for them? massive thanks
@dfountainАй бұрын
Yes, the SoR is the full time amount no matter what. It makes it far less likely that abatement will affect you if you continue to do 0.6 work. Once you take the pension it goes up each April in line with inflation. Once it is taken it is based on the salaries leading up to the date it is taken, future salaries have no impact on that pension.
@daveharding9196Ай бұрын
Just received the same letter from Teachers Pension stating they are unable to process at the moment... so will wait it out until I hear from them to action additional years! But great information David as always
@joekeown4169Ай бұрын
Good video and I like how you explain in simple terms. However, straight numbers can be disingenuous. Employer contributions, whilst sounding generous, are merely a salary sacrifice paid as pension contributions, private sector pay on average higher. Plus the money invested gets to grow at market rate so putting in X% doesn't take into account how much they grows in the market when you take X% out.
@MW-od5wpАй бұрын
Hi Dave. Is the reduction in Final Salary pension for taking phased retirement before NPA of 60 calculated monthly or yearly? I.e if someone wanted to take P retirement at the end of a term which was several months before they turned 60 what percentage would it be reduced by? Many thanks for great video!
@davidepellegrino319Ай бұрын
HI David, To know the pension fund amount do we have to multiply that by 20? Would that mean if we have 1000 is it actually 20000 in the fund?
@dfountainАй бұрын
There is no pension fund amount. The TPS is what is called an "unfunded" scheme. The contributions teachers pay go to the Treasury who then pay out the pensions, if the contributions paid by current teachers are less than the amount paid out then the Treasury pays the extra needed, if the contributions paid exceed the amount paid out then the Treasury keep the extra.
@davidepellegrino319Ай бұрын
@@dfountain Thanks for your answer. In my case I'd like to transfer my funds to another provider, how do I know how much contributions have been paid to date that I can transfer?
@MarkFreeman-w4jАй бұрын
When applying for retrospective additional pension, how do I know the exact date when I was moved to the Career average scheme so my application is not rejected and I can maximise the benefits? Is it based on my date of birth? Buying it with a lump sum appears to be the best value?
@dfountainАй бұрын
The transition dates are here: www.teacherspensions.co.uk/employers/advising-members/eligibility/~/media/93CC7173567A46B2A3D99E4D242FCEE9.ashx Though the date you choose has to be one where you would have made this commitment at the time rather than trying to find the one that is the best value now of course.
@MarkFreeman-w4jАй бұрын
@@dfountain Many thanks, Your speed of response and knowledge is impressive! I will choose a date soon after my transition date when I luckily received a lump sum from family!
@ianwall9152Ай бұрын
Thanks for all your content. Quick question. Will only these that bought these flexibilities get a letter ?
@Pitmirk_Ай бұрын
22:25 everyone... Thank you. I'll have to work out if there's any scope for buying this... wanted additional pension but used the faster accrual instead during the remedial period, so already did something but that also wouldn't have been my preference. A lot to unpick
@dfountainАй бұрын
The Faster Accrual in the remedy period has to now be offered as a conversion to Additional Pension. You should have been, or shortly will be, sent a message detailing the compensation and conversion figures, However, those figures are not directly comparable - see this video for my concerns on that: kzfaq.info/get/bejne/qJiKpNGEnLnUeWg.html
@MilesDunfield-fb8uvАй бұрын
Thanks for revealing this opportunity. Could you clarify for me how I should interpret the maximum additional pension figure? Can I just divide the figure by 250 to get the maximum number of £250 blocks that I can buy or does it relate to the maximum amount I can pay. Many thanks
@dfountainАй бұрын
You divide it by £250 to see how many blocks you are allowed to buy, £6,500 = 26 blocks.
@MilesDunfield-fb8uvАй бұрын
@@dfountain Thanks😀
@peterknapper8307Ай бұрын
Hi David Is the normal response from the TP ? Dear Mr Knapper I refer to your application to purchase retrospective Additional Pension in the Final Salary scheme. We are currently unable to progress your request. We are restricted by the Department of Education legislation and when we have received the information that we require to process your application, from the Department of Education, we will be in contact with you accordingly. Thank you for your patience. Yours sincerely Tony Chard Pensions Administrator
@dfountainАй бұрын
It is a common response. They appear to be putting off people applying whilst they try to get up to speed with producing the RSS's (remediable service statements) for everyone as they must get that done before April and there have been delays in getting instructions from the Treasury about the tax status of refunds/compensation and interest.
@jane-fw4nhАй бұрын
Hi David. Just the same query again as I can’t find anything on tps site. I will be applying for IHR soon. I may or may not get it. I am currently in pensionable service but not paying pension as I have been sick for 18 months. I have only just found out, like most, about the ability to buy retrospective pension blocks from your video. I am a transition member illegally moved to CA67 from FS60 and have evidence that I consulted with Wesleyan to buy additional pension in 2016 but didn’t because it would all have gone into CA amd the deductions to take it at 60 would have been too large. I’m now looking at the applications form and it says you can’t apply for this within a year of IHR . This seems grossly unfair as I wanted to buy additional pension as a 40% tax payer in 2016, when I wasn’t ill. By applying restrictions now it doesn’t take into account the fact that I was prevented from doing this in 2016. Would you please investigate this for myself and other members as I feel discriminated against being ill now, because if the remedy period had t happened I would have bought this 8 years ago.
@dfountainАй бұрын
Yes, there is this line on the retrospective additional pension form that says: "If you retire on ill-health grounds your additional pension will be paid immediately without reduction provided that you were in good health when you made your election and you became incapacitated more than one year after the date of the election." I can understand that someone has looked at the concept of retrospective pension and applied the rules that govern how they currently are written to prevent someone taking advantage of the scheme if they know they have a much shortened life expectancy but, as you say, doing this when you have been illegally denied that opportunity up to 9 years ago doesn't sit right. So, I have looked at the regulations: The Teachers’ Pension Scheme(Remediable Service) Regulations 2023 and in particular at CHAPTER 4, the remedial arrangements to pay voluntary contributions to the legacy scheme. Much of which I cannot really get my head around either! The problem I suspect is where it makes reference to the Schedule 4 of the 2010 regulations where there are sections that appear limit if AP can be purchased during periods of ill-health...none of which though negates your central argument that you could have bought it many years ago before any such restrictions might have had any effect. There is nothing in the remediable regulations, as far as I can see, that would otherwise bar those currently applying for IHR making an application for retrospective additional pension. It is likely going to requires a challenge to be made against the line on the form that requires you to be "in good heath when you made your election" and take that further to the DFE who may direct the TPS to look again at how them are implementing this option for those in your position and if that doesn't get a result then to the Ombudsman.
@carolgibson-smith4101Ай бұрын
Fantastic so much clearer now and feeling so much more less stressed
@paulclark66Ай бұрын
Thanks for this David. If the tax relief is calculated by TP and deducted from the cost, and we pay monthly, can this come from salary as a monthly payment or does it need to be made separately? If it comes from salary, I assume we won’t get tax relief on the monthly cost now? Thank you.
@dfountainАй бұрын
I suspect that they have not come up with a solution to this yet. They initially refused to accept teachers should be allowed to make monthly payments, insisting that they would only take a lump sum payment. Once it was pointed out, via a complaint or two to the DFE, that this was contrary to the legislation as well as to the natural justice that requires those illegally prevented from purchasing at the time to be given the same options they would have had access to back then, they relented. However, as far as I am aware they have not given anyone who has asked for a monthly plan any indication of how this will be processed.
@joegraham2346Ай бұрын
Is this also true for retired Scottish teachers? I took early retirement at 58, I am 59 now and I think I meet all the criteria in your video, but until today I was totally unaware of this.
@dfountainАй бұрын
Pensions is a devolved matter and so I don't know how they are going to implement this but, in essence, the same legal principle applies. Those prevented from buying this at the time by a the illegal change must be given the opportunity to do it.
@joegraham2346Ай бұрын
@@dfountain Thank you for sharing your knowledge and understanding of pensions, and taking the time to reply to my question.
@ianwall9152Ай бұрын
This sounds very attractive and much better than SIPP as it has a guaranteed investment return Quick question - how does the tax relief work ? Do you claim it for this tax year even if you are buying it retrospectively in 2015 ?
@dfountainАй бұрын
The TPS determine how much income tax relief you would have got and deduct that from the costs their calculator gives them. In other words HMRC is bypassed and does not get involved. It was decided that trying to re-open everyone's tax affairs from the 7 years would be too burdensome on HMRC and so to simplify it each scheme would assess how much income tax relief you would get and apply it for you. To do this the scheme looks at your teaching salary and works out how much and at what level you would have paid tax on the amount they are going to charge you. Step 1 - Work out the cost of buying additional pension (for example £20,000) Step 2 - Work out how much of that £20,000 would get 20%, 40% or 45% income tax relief applied to it Step 3 - Deduct the tax relief from the "bill". (If all of the £20k was to get 20% income tax relief then that bill becomes £16k) Step 4 - Work out how much interest needs to be charged on the "bill".
@mmmatthew69Ай бұрын
Yet another fantastic video David - thank you so much. I took a one-month break in my TP last year to retain my best inflation adjusted salary (in last 10 years) and now I'm thinking of purchasing this retrospective additional pension, which I had previously rejected on the career average terms and diverted funds elsewhere. Is there a window to take advantage of this correction? Will it still be available next year for example?
@dfountainАй бұрын
Yes. The window is based on when you get your "remediable service statement" (RSS). You have to apply for retrospective additional pension before you confirm your choices for the remedy period using that statement and within 6 months of getting the RSS.
@mmmatthew69Ай бұрын
@@dfountain Thanks David. I'm mid 50's and haven't had an RSS yet. Still teaching (adult education) and not planning to use TP until 60-62ish. TP website states "The member won’t need to make their choice on their remedy period service until they apply for retirement. They’ll receive their RSS as part of the application process." So looks like it gives me a while to apply but hoping to do so later this year. Assume it's ok to apply years before getting the RSS?
@mmmatthew69Ай бұрын
Sorry another thought... sounds like you may have to commit to which remedy service you will use before you can apply for this additional pension. If the scheme personalised calculator is to be believed (for age 62), I am drawn slightly more to CA rather than FS (nearly £2k more pension with £12K less lump sum). In which case, I may not be able to apply for retrospective FS additional pension - is that right? Sorry for the questions.
@mmmatthew69Ай бұрын
In other words, can I have FS additional pension but regular CA pension at same time? :-/
@dfountainАй бұрын
@@mmmatthew69 The legislation requires EVERYONE be sent an RSS by April 2025, so the deadline will be much sooner than when you intend to retire ;)
@unreachablerichАй бұрын
Hi David - thanks for the information. Are there any other penalties to taking a short break? On the opt-out form from the TPS it states the following: By opting out of the Teachers’ Pension Scheme I will forfeit the right to the following scheme benefits in respect of future service: • my employer contributing towards the cost of my benefits (currently this is 23.6% of your pensionable earnings) • a guaranteed pension at normal pension age • the option to take a tax free lump sum • pension value protected through full index linking • access to ill-health benefits, should I become permanently unable to teach • children’s and dependants’ pensions • in-service death grant. My question is, are all of these above points only applicable for the month that you take a break, or are any of them permanent changes (penalties) due to a break in service?
@dfountainАй бұрын
Yes, that message is designed to persuade you to stay in the scheme but it is really aimed at those thinking of opting out permanently and not for the reasons I refer to. I go through these points here: dfountain.co.uk/opting-out-warning-tps/ The only ones that relate to those taking a short-term break are the last ones that go over the death benefits.
@MathewCymruАй бұрын
On 1st April 2015 I was earning £45,000. Would this have made me a 40% tax payer?
@beatrizfonseca1592Ай бұрын
I applied for some additional pension recently and got the message... "We are currently unable to progress your request. We are restricted by the Department of Education legislation and when we have received the information that we require to process your application, from the Department of Education, we will be in contact with you accordingly."
@ptracey3425Ай бұрын
David thank you for the superbly informative videos you have produced to help your fellow teachers. Acting on your advice I wanted to download the pdf of my benefits statement to check the best 3 years. When I click on benefits I cannot see the pdf option. In fact all I see are 3 boxes ( current, last year and year before). When I open these boxes they all say: My Benefit Statement. Unfortunately it’s not been possible to provide an online Benefit Statement at this time……..Due to the complexity of some benefit calculations a minority of members won’t be able to successfully view a statement. Is there another way I can access the detailed pdf version? I am concerned that I may be disadvantaged without access to all the information that I need to make an informed decision.
@dfountainАй бұрын
Send them a message asking to be sent a copy of your statement.
@ptracey3425Ай бұрын
Thank I have now done so
@louisecampbell1289Ай бұрын
I too had this message. I phoned TPS and was told it was because I needed to provide them with my bank details to refund from the Rollback choices situation (hope that makes sense). They assured me that once the receive my bank details (another form to fill in from their website) then I will be able to see my statement online again. I hope this helps and isn’t confusing any issues.
@ptracey3425Ай бұрын
Thanks Louise that’s kind of you to take the time. I replied to their response to my query which mentioned something to do with flexibilities. I don’t have any that I am aware of. In any case I will give them a ring and hope I have the same success as you did. Peter
@roblowry9457Ай бұрын
Great stuff. Are you allowed to buy this if you are already taking your teacher pension?
@dfountainАй бұрын
If you are one of those with transitional protection and you have not already made your choice as to which scheme the remedy period will be counted in, then, yes, you will be able to buy retrospective additional pension. All those who were illegally denied this opportunity between April 2015 and March 2022 can apply to buy it if they would have bought it at the time.
@dannyrugbyboy10Ай бұрын
Thanks 🙏🏻 in your example you buy 1 block from 2015… in theory can you buy a block for each year i.e all 8 retrospective years 2015-2022
@dfountainАй бұрын
It has been reported that the TPS are saying that you can make ONE application. The form itself doesn't allow for multiple years to be specified but as the premise for the legislation is to ensure you can get what you would have been able to get had it not been for the illegal actions of the Government this should be possible. Though I don't think this would give any advantage over asking for 8 blocks to start in 2015 and be paid for over a period of 8 years for example. There is a limit on how much you can purchase. (£6,500 in 2015/16 for example)
@alexreidАй бұрын
How do we get prices for paying it back monthly? I can’t seem to get any definitive answer and getting no replies from TPS. Have they even sorted the tax implications yet with that? I get you can write a letter with application, but how do we know the prices for spreading over diff amounts of years before we know which option to apply for in the letter? I feel in limbo still at mo
@dfountainАй бұрын
Yes, I made this spreadsheet just to do the lump sum calculations. The monthly ones is a little harder, and I am not sure it is even possible given the changes made to the costs if you spread the costs over the years where the contribution rates changes.
@alexreidАй бұрын
@@dfountainhow do I get them to do it though? Surely they must be able to work it out before I choose which number of years to spread over and then apply. Not getting anywhere with them though when asking for some options
@MathewCymruАй бұрын
Brilliant work yet again David. Thank you. I’m not sure if I have received my RSS (how do I check this?). Can I apply for this before receiving my RSS? Will this be reduced by the same amount as the rest of my final salary (NPA 60) if I retire at 57?
@dfountainАй бұрын
Unless you have applied for retirement it is extremely unlikely you have had your RSS. Check your online account for "messages". I did apply before getting the RSS but I have heard of some others being told to wait until they get their RSS. The TPS have a mountain to climb in terms of meeting the deadlines for issuing those so I am not surprised they are doing that. Yes, it is reduced if you take it early.
@jane-fw4nhАй бұрын
If I’m about to apply for ihr in the next month or so and my contract will end and I want to do this ( as a 40% tax payer in April 2016) should I be acting very quickly? How is this affected by ihr ? I’m 56 transitionally protected member with npa 60FS and npa67 CA. I wanted to do this in 2016 and Wesleyan decided against it, but of course I would have been buying in extra CA not this FS . Any advice please David ?
@dfountainАй бұрын
Afraid I don't know. The retrospective process should put you back in the position you could have been in had you not been illegally prevented from doing so. However, there are also rules about making such applications close to a period where ill-health retirement is going to be taken. I suspect you may need to be able to justify, to a greater degree than normal, that you WOULD have made the purchase of AP back in the 2016 period.
@jane-fw4nhАй бұрын
Brilliant ! Thank you. I wanted to do this in 2016to reduce 40% tax .
@dfountainАй бұрын
When you get your figures do check that you are getting the tax relief you expect. Knowing the rough monthly costs would help if you wanted to spread the cost across several tax years, getting the extra 20% tax relief is likely to outweigh (don't take my word for it) the additional cost if you go into the higher cost periods.
@markmahood3093Ай бұрын
Another great video! Thanks. Any idea how this works in Northern Ireland? When i called them they seemed unsure and then told me i had missed the deadline which was the in Feb 24. I didn't even know such a thing was possible until about 6 weeks ago!
@dfountainАй бұрын
Sorry, pensions is a devolved issue and as such NI will be handling this independently of how it is being done in England and Wales. I have not seen anything published in terms of what legislation they are adopting to handle it.
@999dandenАй бұрын
Great video David, I am going to buy 2x blocks of 250. Do I download the form from TPS online?