My 47-year-old wife is considering retiring from her teaching job. Since she has worked part-time for the majority of her career, her teaching pension is quite low. Would she be able to do anything with that fund, such as use it to invest in property?
The pension freedoms introduced in April 2015 that allow early access to your pension funds from the age of 55 don’t apply to the Teachers’ Pension Scheme, which has its own rules. Normal pension age on the scheme is the higher of either 65 or the state pension age for those who have joined after 1 January 2007, and so members can expect to see this age increase, to 66 by October 2020. If your wife joined prior to this date, she can get her pension at 60. The only exception to this would be in very select circumstances, such as poor health.
Taking early retirement from age 55 is possible, but pensions benefits will be discounted for each year she is below the pension age.
Therefore, leaving the pension where it is for the present time could make sense if this is possible, given your particular circumstances.
In fact, your wife would be wise to try and leave her pension untouched for as long as possible in order to maximise the benefits. As the Teachers’ Pension Scheme is an unfunded pension scheme, your wife cannot opt for a cash equivalent transfer value to invest into a different type of pension arrangement with wider investment powers and options. Even if transferring were an option, it is highly debatable as to whether this decision would be wise, as she would be giving up guaranteed benefits for benefits dependent upon investment performance in the future. Referring to your point relating to investing in property, even the most flexible of pension arrangements with wide investment powers cannot invest in domestic property, but only commercial property, such as shops and offices.