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Rakhi Vasavada
Rakhi Vasavada, Financial Advisor
Category: Finance
Satisfied Customers: 4550
Experience:  Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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I left the NHS pension early at 54 due to personal and urgent

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I left the NHS pension early at 54 due to personal and urgent financial reasons. I am now in receipt of £680 per month, having spent the lump sum.

I work full time as a senior lecturer and pay £431.89 into the teacher's pension scheme. My wages and pension bring my annual gross salary up to £55,272, therefore I pay higher rate tax on some of it. I am thinking of paying extra into the teacher's scheme to recoup some of the losses of having to take NHS pension early and because I won't be in this scheme for long. Aim to retire at 65.

The teachers scheme offer 2 things- 1. paying AVCs into the prudential or making extra contributions in to their scheme. I have no idea which is better. Also, will paying into the teacher's scheme affect my NHS pension or vice versa when I eventually do retire?? And how much money do I need to put into my pension to get out of the higher tax bracket,


Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

In my opinion, paying AVC into the prudential would be a better option and greater flexibility especially when you are currently in higher tax bracket.

Paying AVCs are tax efficient qualify for tax relief like other pension contributions do. Subject to HM Revenue & Customs (HMRC) limits, each £100 you invest into your pension will only cost you £80 (as a basic rate taxpayer), as the remaining £20 that you would normally pay to the taxman will be paid into your pension as tax relief instead. This will be higher if you are a higher/additional rate tax payer.

Having said this, apart from the above, all AVCs are aimed at boosing your retirement income. AVC Plans aims to increase your retirement income and sit alongside any company pension scheme you may have. You can also take a tax free cash lump sum, just like other pensions.

You can consider putting some 10-15% more of your money to come out of the higher tax bracket.

I am sure this would help.

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Warm Regards
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