Dominic, a Principal at a local college, had recently been on an industry seminar where they spoke in great length about the Teachers’ Pension Scheme (TPS). Dominic had always been aware that he was making payments into this scheme, and that the idea behind it was to provide a guaranteed income in retirement. Until now he did not see a reason to delve into the details of the scheme any further than that.
However, Dominic had recently announced his intention to retire in 18 months’ time and he felt that he needed to familiarise himself with what he could expect in retirement. He had been paying into the scheme for many years, what did he have to show at the end of it? Unfortunately, the seminar only left Dominic confused and raised more questions than it did answers.
- Dominic realised he did not know how much he should expect to receive in income when he retired.
- Although he had a retirement date, he was unsure when he would start receiving his benefits, or if there was an ideal time for this to happen.
- Dominic wondered whether waiting until age 60 might mean he received more than if he took benefits immediately.
- The seminar had mentioned tax, but he was in the dark here too. He had questions around how much tax he could or should pay.
- A lump sum had been mentioned but there was also a warning about this impacting on long-term income. Dominic was unsure of the right choice in this area.
- He also had a nagging feeling that there was more flexibility in the scheme than he was aware of, but because of all the changes to the TPS in recent years, he was not up to date with the current rules, nor did he have any idea what would work best for him personally.
- Most of all, Dominic was concerned about whether he could retire at all. He wanted to know if the pension income was going to be enough to cover his existing lifestyle, or if he was going to be forced to make changes, such as downsizing his current property.
- He also worried about what would happen if he died. Would his family receive any of the money he had been saving up for so long?
The more Dominic thought about the TPS, the more he realised that he did not know the answers to important questions which would shape the rest of his life. There were far more intricacies involved than he suspected and he knew that he just did not have the time, or the technical expertise to get to the bottom of it. It was time for Dominic to get some external, professional help.
Dominic approached 1st Chartered later that week to begin his Financial Planning journey. His financial planner had plenty of experience dealing with the TPS and Dominic grew confident in the advice he was being given. The financial planner was able to explain the scheme in much simpler terms and clarify exactly which options under the scheme would benefit Dominic the most.
The financial planner emphasised how important it was that the TPS was used in a way which benefitted Dominic individually and worked towards his life goals. Together, the financial planner and Dominic were able to highlight a way in which Dominic could receive benefits earlier, enjoy more flexibility and pay less tax whilst receiving enough income to maintain the lifestyle that he had come to enjoy! Dominic was also saved the expense of a large tax bill that would have been due before retirement in connection with the scheme. Dominic did not even know that this tax bill could be due and it would have come as a very unpleasant surprise.
Through the guidance provided by 1st Chartered and the Financial Plan which had been created specifically for him, Dominic was able to retire exactly when he intended without ever having to worry about his financial security in retirement. He was also able to rest in the knowledge that if anything happened to him, his family would be well catered for by the extra provisions made as a result of the financial planner’s advice.
Start your journey today and take a step towards financial security and peace of mind. 1st Chartered work with teachers and senior education professionals to plan their financial futures. We are experts in the TPS and in creating individual financial plans which allow you to pursue the life you want in your retirement.