Teacher’s Drawdown Pension
We often hear from customers who want to know if they can use a drawdown facility with a teacher’s pension. While the UK teacher’s pension itself does not offer drawdown, it’s possible to transfer to a scheme that does. However, there are compelling arguments for sticking with a teacher’s pension, and these need to be weighed up against the benefits of drawdown.
In this article, we’ll take a look at the options available to holders of a teacher’s pension and explore the implications of switching.
We’ll be looking at the following:
Can I drawdown from my teacher’s pensions?
This is not possible, although you might find there are other options available if you speak to an expert pensions advisor.
The Teacher’s Pension is a ‘defined benefit’ pension scheme, which means your retirement income is based on what you earned during your career, as opposed to a ‘defined contribution’ scheme which is dependent on what you paid in to an invested pension fund and on how well it performed.
Defined benefit schemes don’t allow drawdown because they are set up to pay a regular income that is guaranteed for life, whereas a defined contribution scheme allows you to make withdrawals as and when you choose, and to reinvest the remaining balance until you decide to cash it in.
While this model allows your pension pot to continue growing and can give good returns, it isn’t guaranteed for life and could run out if not carefully managed.
When should I switch from a teachers’ pension?
While teacher’s pensions provide a secure and reliable income that can’t usually be improved upon by transferring to a different plan, there are some specific exceptions to this rule in the event of certain personal circumstances, including:
- Being diagnosed with a life-limiting illness
- Divorce (depending on circumstances)
- Sudden financial difficulties that need resolving
In all of these examples there may be a need to withdraw a large sum of money as a lump sum, which isn’t possible on a plan that is structured to provide a ‘salary’ with regular instalments spread over several years.
A drawdown plan is a better solution in these situations, because it allows greater control over your savings, including the ability to withdraw lump sums.
However, even in these cases there may be other solutions that make more sense, such as equity release, secured loans, personal loans, refinancing an investment property or taking out a lifetime mortgage.
Whatever your situation, the specialist advisors we work with have strong experience in navigating these sometimes complex decisions, and can help guide you towards the most satisfactory solution for you and your family.
Make an enquiry to get started.
How do I switch to a drawdown plan?
If after working with an advisor you conclude that transferring your teacher’s pension to a new plan with a drawdown facility is the right choice, the next step is to notify Teacher’s Pensions that you want to leave the scheme, and transfer your savings into a drawdown plan.
There are now plenty of plans with drawdown facilities available to choose from. The pensions experts we work with can help you to identify the most suitable scheme for your needs and circumstances, and to ensure the transfer goes as smoothly as possible.
Speak to an expert on teacher’s pensions today
Want to speak to a qualified pensions advisor on your drawdown options with a teacher’s pension? To arrange a consultation with the experts we work with, call us on 0808 189 0463 or make an enquiry and we’ll be in touch shortly to discuss the next steps. We don’t charge a fee and there’s absolutely no obligations on your behalf to take the advice offered.