My pension provider, "Teachers Pensions" or TPS allows for 2 pension uplifts:
- Additional Pension gives members the option to make additional contributions to buy extra annual pension in addition to their main scheme benefits. These are bought in multiples of £250 pa.
- Faster Accrual gives you the opportunity to pay higher contributions to increase your pension for a particular scheme year. One can choose to pay at 1/45, 1/50, 1/55 accrual rates instead of the standard 1/57 accrual rate.
Information can be found at https://www.teacherspensions.co.uk/members/faqs/working-life/adding-to-your-pension-with-flexibilities.aspx. I do not fully understand how the accrual rate works.
I am stuck between buying Faster Accrual (at say 1/45) to accrue pension at a higher rate, or instead opening a lifetime ISA to take advantage of the 25% government payment. This sounds like "free" tax-free money, albeit limited to deposits of £4000 per year.
On what basis should I figure out which option is best for me?
