Yes, the second one relating to the final salary scheme service is on the way but I put it on hold to do the review of the "changes are coming" letter from the TPS
So helpful David, thank you. It's really good to know that going part time means better value. If I wanted to make up for the overall decrease in my pension, would there be a way of boosting it that would be optimal i.e Faster Accrual or Additional pension for someone in this situation?
Hi David, me again, I'm slowly inching my way to understanding thanks to your help. However, I've been trying to work out what to do for the best, take phased retirement or go part time. It seems I will lose 7000 from my final salary if I go at 63, but not sure how to work that out if it's phased. (I used TP calculations to work out my final salary, and my lump sum halved! so that can't be right!) I was hoping to cut hours either way at the end of this year, when I will be 63. I know this video was for the CA, and I'm not worried about that, but can't quite get to grips with the final salary. Would you mind if I sent you my figures again? I've looked for you video on going part time, but can't seem to find it. Thank you.
hi David - great video - really helpful - thank you. I've just checked my most recent statement and, although I am part time, the 'PT salary' column just says '1' for most entries. (the days out column is filled in) Does this mean my career average part of my pension will not be calculated properly? I've had so many issues over the years with my TPS statement being wrong and having to get my college's HR office to sort it out - I'm quite paranoid now.
Hi Dave, I have PTIs and PTRs in my pay history in a period I am looking at for a possible Hypothetical Calculation. Do you know what the effect there would be? ie does it use the part-time or full-time equivalent amount? Many thanks!
Part-time can tricky. PTI is "irregular" work where you tend to be employed day-to-day and as such they use just the reckonable service days when adding up the 1095 days needed for the 3 years (3 x 365 = 1095). Whereas, PTR is "regular" work where you are employed as a "part-timer" on the same weekly rotation. The days in these employments cover the entire period and so it is the qualifying service days that are used for getting to 1095. As far as the "salary" used for each of these days, under either part-time designations is exactly the same amount as for a full time employment and is shown in the column headed "annual salary". Check that carefully though as some schools get this wrong and put in your part-time salary instead.
Great video. I'm concerned with what happens with the career average pension if you work for a decade on a high full time salary - then work part time for over 10 years. If I'm reading it right your career average salary becomes based on your lower salary as it only looks at best 3 years in the last 10 or the most recent year?
You are confusing the final salary pension calculations with the career average scheme. It makes no difference to the career average scheme what you finish on. This is because the amounts added to the CA pension are added at the time you are paid. If you work a year at £57,000 then £1000 gets added to the CA pension, nothing you do thereafter changes that. If the next year your work a 0.1 timetable and earn £5,700 then £100 would be ADDED to the £1000 from the previous year and your pension would then be £1,100. (I'm ignoring inflation and the annual increase for simplicity here). No matter how many years you carry on working nothing would alter the fact that in year 1 you added £1000 to the pension scheme. In the CA scheme there is never actually a calculation of the "average" salary, it's just the name given to the scheme because this is what it, roughly, ends up being equivalent to. (In the above example the average salary would be (57,000+5,700)/2 and if you worked out how much pension that adds over 2 years it would be the same £1,100 total)
Hi David Thanks for your videos. I am at the moment split between going part-time or not. When should we expect the second video on working part-time and the final salary pension? Thank you once again.
Yes, the explosion in membership of my FB group and some other stuff in my life has put this on a back burner for the moment. Sorry about that. With it no longer being possible to add service to the Final Salary scheme it, imo, is not too urgent. In short though, during the final salary pension period, a part-time worker has their pension based on their years of service in the same calculation that a full time teacher does, but to ensure they get a "fair" amount of pension for the work they do there has to be an adjustment. That adjustment is made to the "years" of service. The calculation for both final salary schemes involves multiplying the (Years of Service) by the (Final Average Salary). Where a full time worker gets a full "service year" for every calendar year they work a part-time teacher will get only part of a "service year" in each calendar year. For example, a full time teacher has 365 days added to the their service in a year but a 0.8 teacher will have 292 days added (365 x 0.8). Over a period of 5 calendar years therefore a a full timer gets 5 "service years" but the 0.8 teacher gets 4. This allows the calculation to cope with mixed periods of service, some full time and some part time. This does mean that, for both full time and part time teachers, the "final average salary" has to be based, always, on the full-time-equivalent amount, otherwise the part time teacher would be penalised twice.
What if a teacher has two part-time roles at two different schools that together sum to a full-time role in terms of hours. As each role would be in the lower tiers, they would pay relatively less compared to a teacher working one full-time position!
The Teachers' Pension scheme is a net pay scheme with contributions being taken before income tax is deducted, so the cost per £100 does include the income tax relief at whatever is your marginal rate. With very few teachers in the 40% bracket I did ignore this. By the same token the £100 of pension you have bought is likely to be taxed less since, almost, no-one's pension comes close to matching their actual salary. The income tax position I do go into more detail in this discussion as to whether it is worth paying into the TPS in the first place (short answer being "yes" if you don't want to watch it)...ua-cam.com/video/kJpS3lS3h10/v-deo.html
Yes David. Understood . Fortunately my partner is affected by the 40% rate and makes a significant difference, so thought would mention if others weren’t aware. Enjoying your videos, very helpful. Regards.
Nice little positive there for part time workers. The increasing % of salary going into the pension has always seemed a little odd to me. Everyone gets 1/57 no matter the salary. If you earn more your 7.4% will also be more.
Yes, the tiers are there to encourage teachers to pay into the scheme when they first start. Over a "career" most will pay in a similar amount as they will spend very little time, relatively, on the lower tiers.
Very good video. This clarifies the situation regarding part-time work.
Yes, the second one relating to the final salary scheme service is on the way but I put it on hold to do the review of the "changes are coming" letter from the TPS
Another great video. Thank you!
So helpful David, thank you. It's really good to know that going part time means better value. If I wanted to make up for the overall decrease in my pension, would there be a way of boosting it that would be optimal i.e Faster Accrual or Additional pension for someone in this situation?
Hi David, me again, I'm slowly inching my way to understanding thanks to your help. However, I've been trying to work out what to do for the best, take phased retirement or go part time. It seems I will lose 7000 from my final salary if I go at 63, but not sure how to work that out if it's phased. (I used TP calculations to work out my final salary, and my lump sum halved! so that can't be right!) I was hoping to cut hours either way at the end of this year, when I will be 63. I know this video was for the CA, and I'm not worried about that, but can't quite get to grips with the final salary. Would you mind if I sent you my figures again?
I've looked for you video on going part time, but can't seem to find it. Thank you.
Sure, I have been a bit swamped with requests for help so haven't got around to making the 2nd one on part time work and the FS scheem.
hi David - great video - really helpful - thank you. I've just checked my most recent statement and, although I am part time, the 'PT salary' column just says '1' for most entries. (the days out column is filled in) Does this mean my career average part of my pension will not be calculated properly? I've had so many issues over the years with my TPS statement being wrong and having to get my college's HR office to sort it out - I'm quite paranoid now.
A '"1" is a code for something else - a period where you had concurrent contracts! This makes it almost impossible to check.
Hi Dave, I have PTIs and PTRs in my pay history in a period I am looking at for a possible Hypothetical Calculation. Do you know what the effect there would be? ie does it use the part-time or full-time equivalent amount? Many thanks!
Part-time can tricky.
PTI is "irregular" work where you tend to be employed day-to-day and as such they use just the reckonable service days when adding up the 1095 days needed for the 3 years (3 x 365 = 1095).
Whereas, PTR is "regular" work where you are employed as a "part-timer" on the same weekly rotation. The days in these employments cover the entire period and so it is the qualifying service days that are used for getting to 1095.
As far as the "salary" used for each of these days, under either part-time designations is exactly the same amount as for a full time employment and is shown in the column headed "annual salary". Check that carefully though as some schools get this wrong and put in your part-time salary instead.
Great video. I'm concerned with what happens with the career average pension if you work for a decade on a high full time salary - then work part time for over 10 years. If I'm reading it right your career average salary becomes based on your lower salary as it only looks at best 3 years in the last 10 or the most recent year?
You are confusing the final salary pension calculations with the career average scheme.
It makes no difference to the career average scheme what you finish on.
This is because the amounts added to the CA pension are added at the time you are paid.
If you work a year at £57,000 then £1000 gets added to the CA pension, nothing you do thereafter changes that.
If the next year your work a 0.1 timetable and earn £5,700 then £100 would be ADDED to the £1000 from the previous year and your pension would then be £1,100. (I'm ignoring inflation and the annual increase for simplicity here).
No matter how many years you carry on working nothing would alter the fact that in year 1 you added £1000 to the pension scheme.
In the CA scheme there is never actually a calculation of the "average" salary, it's just the name given to the scheme because this is what it, roughly, ends up being equivalent to. (In the above example the average salary would be (57,000+5,700)/2 and if you worked out how much pension that adds over 2 years it would be the same £1,100 total)
@@dfountain Thank you David! Sorry for my confusion!
Hi David
Thanks for your videos. I am at the moment split between going part-time or not. When should we expect the second video on working part-time and the final salary pension? Thank you once again.
Yes, the explosion in membership of my FB group and some other stuff in my life has put this on a back burner for the moment. Sorry about that. With it no longer being possible to add service to the Final Salary scheme it, imo, is not too urgent.
In short though, during the final salary pension period, a part-time worker has their pension based on their years of service in the same calculation that a full time teacher does, but to ensure they get a "fair" amount of pension for the work they do there has to be an adjustment. That adjustment is made to the "years" of service.
The calculation for both final salary schemes involves multiplying the (Years of Service) by the (Final Average Salary).
Where a full time worker gets a full "service year" for every calendar year they work a part-time teacher will get only part of a "service year" in each calendar year. For example, a full time teacher has 365 days added to the their service in a year but a 0.8 teacher will have 292 days added (365 x 0.8). Over a period of 5 calendar years therefore a a full timer gets 5 "service years" but the 0.8 teacher gets 4. This allows the calculation to cope with mixed periods of service, some full time and some part time.
This does mean that, for both full time and part time teachers, the "final average salary" has to be based, always, on the full-time-equivalent amount, otherwise the part time teacher would be penalised twice.
Thank you so much David. You have put my mind at rest.
What if a teacher has two part-time roles at two different schools that together sum to a full-time role in terms of hours. As each role would be in the lower tiers, they would pay relatively less compared to a teacher working one full-time position!
Yes, that is correct. They pay less as each salary has its pension contribution calculated on the amount that employer pays them.
Good video, clearly not the main point of your video, but worth mentioning how 20/40% tax rates affect net cost of contributions?
The Teachers' Pension scheme is a net pay scheme with contributions being taken before income tax is deducted, so the cost per £100 does include the income tax relief at whatever is your marginal rate. With very few teachers in the 40% bracket I did ignore this. By the same token the £100 of pension you have bought is likely to be taxed less since, almost, no-one's pension comes close to matching their actual salary.
The income tax position I do go into more detail in this discussion as to whether it is worth paying into the TPS in the first place (short answer being "yes" if you don't want to watch it)...ua-cam.com/video/kJpS3lS3h10/v-deo.html
Yes David. Understood . Fortunately my partner is affected by the 40% rate and makes a significant difference, so thought would mention if others weren’t aware. Enjoying your videos, very helpful. Regards.
Nice little positive there for part time workers. The increasing % of salary going into the pension has always seemed a little odd to me. Everyone gets 1/57 no matter the salary. If you earn more your 7.4% will also be more.
Yes, the tiers are there to encourage teachers to pay into the scheme when they first start.
Over a "career" most will pay in a similar amount as they will spend very little time, relatively, on the lower tiers.