Teachers Pension and Life Time Allowance question

[JonRA]

Mrs A was considering retiring imminently but the other day the Teachers Pension Service gave an updated summary of her benefits and it shows her at 106% of the Life Time Allowance (LTA) - something we have never really thought about in the past and, as a result, know virtually nothing about.

However, I read that from April 2024 the LTA is going to be abolished - so my question is simply this, if she waits until April before retiring and starting to claim her pension will this mean that she will no longer be liable for any additional tax? (I presume this is the case but want to be quite sure)

Many thanks in anticipation

Jon

[MakeColdplayHistory]

That's my (very unqualified) reading of the situation.

[adrianw]

And teachers are supposed to be underpaid!

[noTAGlove]

The Government abolished it for the 2023-24 tax year. So, she could retire tomorrow and there would be no charge.

[JonRA]

And teachers are supposed to be underpaid!

LOL - She's a university head of department with 44yrs of pension accrued so, in fairness, she's probably got a bit more coming to her than many teachers.

[JonRA]

The Government abolished it for the 2023-24 tax year. So, she could retire tomorrow and there would be no charge.

Great - thanks very much for the correction and clarification

- - - Updated - - -

That's my (very unqualified) reading of the situation.

Thanks very much

[noTAGlove]

LOL - She's a university head of department with 44yrs of pension accrued so, in fairness, she's probably got a bit more coming to her than many teachers.

I previously guessed a headteacher. That's a very nice pot to enjoy retirement to her finest! And 44 years is properly time served.

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[JonRA]

I previously guessed a headteacher. That's a very nice pot to enjoy retirement to her finest! And 44 years is properly time served.

Sent from my SM-X200 using Tapatalk

She enjoys her job and works very hard - even though she's been making noises about retiring, I'll believe it when she actually does.

[adrianw]

LOL - She's a university head of department with 44yrs of pension accrued so, in fairness, she's probably got a bit more coming to her than many teachers.

My sister in law was a deputy principal at a collage/university, she retired in July, I was in total disbelief when I found out what she gets.
I wasn’t having a pop at your wife , it just seems that the elephant in the room is government employees pensions, everyone is living much longer and the country can’t afford it, but this isn’t the bear pit.

[Suds]

There will be no lifetime allowance charge from Apr 2023 but some money is still liable to be taxed in another way - as earnings. Your wife’s pension provider can explain.

[JonRA]

My sister in law was a deputy principal at a collage/university, she retired in July, I was in total disbelief when I found out what she gets.
I wasn’t having a pop at your wife , it just seems that the elephant in the room is government employees pensions, everyone is living much longer and the country can’t afford it, but this isn’t the bear pit.

No offence taken - without straying into BP territory, the pros of a TPS pension suit me. There are significant differences though - eg there is no pot to leave as you wish.

[noTAGlove]

My sister in law was a deputy principal at a collage/university, she retired in July, I was in total disbelief when I found out what she gets.
I wasn’t having a pop at your wife , it just seems that the elephant in the room is government employees pensions, everyone is living much longer and the country can’t afford it, but this isn’t the bear pit.

That is a very senior position with many direct reports and significant responsibility.

If she had been doing a role in private industry with equivalent responsibilities, then she would be earning a lot more.

[adrianw]

That is a very senior position with many direct reports and significant responsibility.

If she had been doing a role in private industry with equivalent responsibilities, then she would be earning a lot more.

Maybe in insurance, banking or Pharma but not industry

[Chris_in_the_UK]

Maybe in insurance, banking or Pharma but not industry

I disagree, and TBH it was clumsy comment that you made.

[Rodder]

My sister in law was a deputy principal at a collage/university, she retired in July, I was in total disbelief when I found out what she gets.
I wasn’t having a pop at your wife , it just seems that the elephant in the room is government employees pensions, everyone is living much longer and the country can’t afford it, but this isn’t the bear pit.

I’m not sure many teachers survive 44 years anymore!

[deepreddave]

https://www.gov.uk/tax-on-your-priva...time-allowance

Public sector pensions are decent but a) it's always been a part of the salary package, b) public sector pay has fallen significantly in real terms over the last 20+ years and c) there is no pot to access or bequest as previously mentioned.

Teacher's current pensions are linked to state pension age so they're paying into a scheme in the knowledge the Govt can keep extending the date on which they'll pay out.

[M4tt]

I’d talk to someone at Teachers Pensions as the McCloud Judgement has significant implications for a chunk of pension.

[JonRA]

I’d talk to someone at Teachers Pensions as the McCloud Judgement has significant implications for a chunk of pension.

Isn't that just about the way the more recent years are managed on a career average basis rather than an issue specific to the LTA?

[noTAGlove]

https://www.gov.uk/tax-on-your-priva...time-allowance

Public sector pensions are decent but a) it's always been a part of the salary package, b) public sector pay has fallen significantly in real terms over the last 20+ years and c) there is no pot to access or bequest as previously mentioned.

Teacher's current pensions are linked to state pension age so they're paying into a scheme in the knowledge the Govt can keep extending the date on which they'll pay out.

Go and read the BTL comments in The Times, and the vitriol against any perceived enhanced benefits in the public sector is immense.

It is like race to the bottom. Dont be jealous of other workers T&Cs and fight for your own.

Go and work for the public service if you believe the T&Cs are so good.

[gunner]

Maybe in insurance, banking or Pharma but not industry

You know that they are industries...?

Separately, owing to the way DB schemes are valued for LTA, it's surprisingly easy to get to the 'cap'.

[wallyuk]

44 years is impressive. After 30 odd years in secondary you feel like a dinosaur. Probably look like one too.

[craig1912]

Separately, owing to the way DB schemes are valued for LTA, it's surprisingly easy to get to the 'cap'.

Is it? DB schemes have a relatively generous multiple of twenty times expected pension. So not that easy as expected pension needs to be over £50k. I guess pretty irrelevant given the LTA has gone (at least for the time being!!)

[noTAGlove]

LOL - She's a university head of department with 44yrs of pension accrued so, in fairness, she's probably got a bit more coming to her than many teachers.

Usually a DB pension is capped at 2/3rds final salary. If your wife was on 60ths accrual, that means she would be maxed out at 40 years of contributions.

Or is it different for the public sector?