How well do you think the average teacher understands their pension?
I've been with Wesleyan Financial Services for 16 years now, during that time I spent 13 years as an adviser - very much embedded in the profession and working directly with the teachers. Currently, I manage a team of Specialist Financial Advisers who are continuing with that job. During that time, I would say that as a broad rule, most teachers have an average understanding of their pension.
There are two reasons for this – the first being the complexity of the scheme. It’s undergone a lot of changes lately and there are currently three different versions of the scheme that you could potentially be a member of - although most people have a membership of two of the available three schemes. The sheer level of complexity can be somewhat off-putting when it comes to trying to understand the intricacies of the scheme.
The other aspect is time. Teaching is a tough profession – it comes with a number of stresses and strains which take up a lot of the working week, and then in the evening when you are dealing with family, friends or putting your house in order, reviewing your finances understandably can fall by the wayside. Therefore, I would say that it’s the complexity of the scheme and the fact that teachers are generally time-poor, that contribute to the lack of a good overall understanding of the scheme.
How can a financial review help with understanding your pension and planning for retirement?
The review system used by the Specialist Financial Advisers here at Wesleyan Financial Services, is fully comprehensive and encompasses so much than just looking at your pension statement.
The sheer level of planning involved within this, may well come as a surprise to clients - especially so if they’re new to financial planning or haven't done it for some time. There is a level of complexity that would extend way past just simply looking at the numbers. Our advisers offer holistic planning, that means looking at your situation as a whole and taking all aspects into consideration – including you, your partner, any family that you've got, any dependents and so forth. It’s also heavily goal based and not everybody's goals are the same.
A good adviser will take the time to understand your individual goals and aspirations - gather detailed information on your financial situation and the numbers involved, which they will then offset against your goals and aspirations. It’s not as simple as someone crunching a set of numbers from a Teachers’ Pensions Scheme (TPS) statement that you provide and feeding back an answer - it is much more comprehensive than that. We also make great use of specialist tools such as the cash flow modular. This allows us to look forward with you, project changes and look at any other available options and literally map out what your retirement will look like for you.
The cash flow modeller is essentially a digital tool – it is an excellent way of putting something visual in front of a client that helps them to understand the trajectory that they're on. All of the things that you might want to do and the time frames in which you want to do them can all be plotted onto the graph with live changes made along the way. This allows you to go away and reflect, then return again and plug in anything you hadn’t remembered to put in, such as when your mortgage is expected to be paid off, when your children will leave university, when your state pension will start, or even that dream holiday that you'd like to take in retirement. Then we would build in your partner's details and their pensions as well. In short, it's a visual representation of your current situation and your financial future that will help you to understand the bigger picture and ultimately line up your goals and aspirations, and to decipher whether the cost of these is met by your Teachers’ Pension Scheme (TPS), state pension when it comes in, and or any other private pensions or investments.
It's all about assessing the income that you've got, what your pension will provide when it comes, any cash savings that you've built up and ascertaining if these could be working harder for you, and thinking about any lump sums that often comes with the TPS and looking at how this all fits together.
Essentially our advisers are also looking to see if the assets that you’ve got are working as hard as they possibly can be, if they are as tax efficient as they possibly can be and everything else in between. Going to see an adviser means reducing the overwhelm that financial planning can sometimes bring when you try to do it yourself - sitting down with an expert who is looking to help you but also has the technical knowledge to understand everything that you have or that you could have, is where financial planning comes into its own.
There is no one-size-fits-all solution when it comes to financial planning for any person, be it a teacher or otherwise - everyone is so different in their needs and their objectives for retirement. The goal is to build a retirement where you have the right level of income and capital and taking specialist support can help you do that.
If you would like support or guidance on understanding your financial position, speak to a Specialist Financial Adviser or Planner at Wesleyan Financial Services for a financial review by visiting Financial advice for teachers. Charges may apply. Learn more about our charges here.
We will not charge you until you have agreed the services you require and the associated costs.
About the author
Oonagh Morrison
Oonagh Morrison joined Wesleyan Financial Services, in 2009 as a Specialist Financial Consultant in the Education Market. She provided holistic financial planning advice to this market until April 2022, when she took on the Regional Manager role for the Scotland, Northern Ireland and NE England areas. She now dedicates her time to developing this established team and working with other colleagues at Head Office to ensure that the needs of the profession remain met.
