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NewsTopping up your Teachers’ Pension
Date: 20.09.07
The options for members wishing to improve their pension through the payment of additional voluntary contributions in the Teachers’ Pension Scheme (TPS) have changed.
Topping up your Teachers’ Pension (England & Wales)
The options for members wishing to improve their pension through the payment of additional voluntary contributions in the Teachers’ Pension Scheme (TPS) have changed. The ability to buy added years’ reckonable service has been replaced, other than for those already participating, by the facility to buy additional pension in multiples of £250 of annual pension up to a maximum of £5,000 per year. The other option provided by TPS is the payment of contributions to the Teachers’ AVC facility provided by Prudential.
As pensions legislation evolves, so too does the variety of alternative savings options available to members of TPS.
The latest change in legislation to affect members’ options was the Finance Act 2004, which came into effect from ’A Day’ on 6 April 2006. This created a single tax regime for pensions, whether they are occupational schemes such as the TPS, or personal pensions, including Stakeholder pensions.
The teachers’ unions became aware that, as a result of these changes, some financial advisers were suggesting that members of TPS could benefit on transferring their Prudential AVC fund into a self-invested personal pension (SIPP). Before any member chooses to take such a course of action they must be sure that this is in their best financial interest for all their particular financial circumstances.
The unions have jointly asked the government actuaries to produce a guide setting out the issues members should be aware of when considering this particular course of action. (pdf)
If you would prefer a printed version, please contact Janine Sansom (janinesansom@pat.org.uk) at HQ.
Reminder: Protecting Normal Pension Age 60 - transition period
Teachers who have previous service in the Scheme and have in excess of five years? gap in the Scheme as at 31 December 2006 must rejoin the Scheme for a minimum period by 31 December 2007 if they wish to retain a retirement age of 60.
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