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Pensions Advice
Yorkshire Lass
Posted: 15 December 2017 14:49:54(UTC)

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I have started a new job and am 51 the company offer a pension with Aviva, the company pay 1% into this and I pay 1% the remaining 4% for the first month I receive in cash. Next month I have the option of opting out of the pension and being paid 5% cash to invest elsewhere.

My pension pots aren't that great from previous employment with a Teachers Pension of £5300.

Thanks in advance
Redundant (Old Timer?)
Posted: 20 December 2017 13:19:55(UTC)

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Welcome to the forum Yorkshire Lass.

I think it is fair to say that members do not give advice, rather they give their comments or views and then it is up to the recipient to Do Their Own Research and come to their own decision. So with that caveat here are my observations:


Although this is £5300 now, it is indexed-linked so with increase each year by CPI until you reach normal retirement date (NRD). I believe its NRD is still 60 and therefore I would suggest that at age 59 you contact the Teachers Pension and ask for a forecast. As you will not get the State Pension until 67 or so, you may want to ask them what the benefits of deferring the pension beyond NRD will be, assuming you decide to carry on working. (I would add that some old civil service type pensions do not increase if deferred beyond NRD and I do not know if the Teachers Pension is similar).


I assume that your earnings and other taxable income is above the personal tax allowance. Thus if you opt out of your employers pension scheme, the 5% cash you receive will be subject to both tax and NIC, whereas if it is paid into the pension not only is it free of tax and NIC, but your employer pays 1% as well!

You are a number of years from retirement, so you could consider being more adventurous. Whilst I do not know, I assume you are paying into a basic workplace pension which is in an Aviva cautious fund. You may want to enquire if you can pay some or all of the money into one or more other funds run by Aviva so that your money has a greater chance of growing, albeit it will be riskier. Just a thought.

Should you opt out? Your decision!


If you have any other pension pots from previous employments you may want to find out if they are final salary or defined contribution (money purchase). With the later, unless they have specific benefits, like a guaranteed annuity, you can usually save admin costs, and hence increase the pot size, by merging them. But I would suggest you seek professional advice should you decide to do this.

As I said, these are only my observations on the limited amount of information you have provided. It is not advice and if you are unsure I would suggest talking to a Pensions IFA.

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Yorkshire Lass on 20/12/2017(UTC)
andy mac
Posted: 20 December 2017 13:36:49(UTC)

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If you have a teachers pension did your employer opt out
If they did your state pension is unlikely to be the full state pension search waspi or look at S Webbs explanations in the Daily Mail ( he would know as he was the one who did not explain the change to parliament) but still got a knighthood

As ROT said get the facts and DYOR and then make your decision
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Yorkshire Lass on 20/12/2017(UTC)
Keith Hilton
Posted: 20 December 2017 13:52:07(UTC)

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I had a group pension with Aviva a few years ago. They had a good selection of 3rd party funds available and a good website, which allowed easy switching between funds. Far better than the other pension provider I was switched into later.

The exact features will depend upon what your company has negotiated with Aviva, but I would imagine that it wouldn't be too dissimilar to the one I had.
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Yorkshire Lass on 20/12/2017(UTC)
Yorkshire Lass
Posted: 20 December 2017 15:15:33(UTC)

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Thank you so much for all your helpful advice and taking the time to reply to me, very much appreciated.

My Teachers Pension I cannot contribute to unfortunately as I have changed roles.

My Aviva Pension is with Aviva Future Focus 2 Drawdown lifestaging investment approach. _ I also have an alternative to split the contribution, which maybe worth considering between Aviva and an additional pension and thank you ROT that is a good point about paying the NIC and tax contributions so having taken your comments into consideration I think my best bet would be to stay with Aviva and split the contributions with Aviva and Black Rock a short term pension I have .

Many thanks for all your input, very kind.

Posted: 31 December 2017 12:41:31(UTC)

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I am very surprised no one has said simply and straightforwardly that you are not putting enough into your pension.

With contributions running at 1% a year, you are not even keeping level with inflation.

It is likely that, health permitting, you will retire when you are somewhere approaching 70; this leaves you with approximately 19 years to build a pension that will be of some help to you during your retirement which is likely to last somewhere between 20 and 25 years.

If you don't want to be entirely dependent on benefits for most of that time, you need to be trying to put somewhere between 10 and 20% of earnings into a pension; unless, of course, you have other means or expectations to see you through.

And be very careful with your choice of pension fund. Avoid all charges; there are funds around that would take most of your current 1% contribution in various charges. And you will need to take some element of risk in your choice if you are to see any kind of positive return; perhaps a ratio of 35%- 65% (risky - safe).

Whatever you do, you need to start now. 19 years will simply fly by.

If you remain earning, and at a sufficient level, then once you draw your teacher's pension at 60, if that's what you decide to do, you can choose to "recycle" that income into your other pension. That might be a good strategy; get some effective advice at the time.
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Mickey on 02/01/2018(UTC), Tim D on 02/01/2018(UTC)
Alan Selwood
Posted: 31 December 2017 13:27:58(UTC)

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I agree whole-heartedly with the comment about upping pension contributions (or other savings as well) as much as you can, since you risk a big cashflow gap between the time at which you can draw on your Teacher's Pension and your State Pension.

It has always been a much bigger task to save enough, even before today's low interest rates, than most people ever appreciate.

Thinking back to around 1990, I remember one company director to whom I made it plain that at his age 60 already, with minimal private pension funding done hitherto, he could legitimately fund an Executive Pension at the rate of more than 100% of salary and this would only take him to the 2/3rds of salary pension level by age 65 (and he was on about £40,000 p.a. back then).

Every funding calculation is different, but I know that you would barely scratch the surface of your funding gap with 2% p.a. from age 51 to 60 or 67. Multiply that 2% by 10, and I suspect that you will be more in the right ball-park! And you need to be a bit adventurous with where the money is invested, because if it is going into cash deposits or bonds, it will not even keep up with current low interest rates and inflation.

Good saving!
Posted: 02 January 2018 10:17:08(UTC)

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I would agree with the comments suggesting to contribute more, assuming that you would not be racking up or deferring repayment of any high interest personal debt by doing so.

If you have any credit card debt etc... then pay that off first before upping your pension contributions.
Redundant (Old Timer?)
Posted: 02 January 2018 12:02:47(UTC)

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"If you remain earning, and at a sufficient level, then once you draw your teacher's pension at 60, if that's what you decide to do, you can choose to "recycle" that income into your other pension."

Pension recycling is a tax loophole that has been largely closed. If you have sufficient earnings and are drawing a pension then the maximum you can put into a new pension is the lower of your net relevant earnings (i.e. salary) and £10000, soon to be £4000.
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Tim D on 02/01/2018(UTC)
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