What Would You Do?

tesuhoha

This is a very big deal for me and I have only a few days to make a decision so I have been posting for advice all over the boards but this one's for you.

Basically we have an outstanding mortgage of £39,000 which has just less than 4 years to run. Our mortgage payment is £835 per month. My husband lost his job in October 2008 and his work has been very erratic ever since. His money is usually spent on food and extras. I earn £16,276 and basically I just work to keep us going. I pay the mortgage, mortgage life assurance, buildings insurance, council tax, fuel, car expenses and everything else out of my salary. At the moment I can just cope and save a bit for Christmas but I never have anything spare to overpay the mortgage.

Now at work they are restructuring and we have all been asked if we would like to volunteer for redundancy. If we don't opt for that we all have to re-apply to a new set of jobs. I think this may involve a pay cut or if I am lucky longer hours with a lower hourly rate. I am worried if I get this pay cut and also the mortgage rate goes up next year that I will no longer be able to pay our way.

If I take voluntary redundancy I would get a redundancy payment of £5,000 - £6,000 plus it would trigger my pension. For my pension if I take maximum conversion according to my ABI I would get a lump sum of £23,500. Therefore in theory I would get at least £28,500 to pay off the mortgage. Our jobs are safe until the end of March so I expect the mortgage to be down to around £35,000 by then. Therefore we could pay the funds off the mortgage and only owe around £7,000. We would then re-negotiate the monthly payment to about £40 pw over 4 years.

If things go right with my husband's job we would pay this amount off by the end of the year. If things go wrong I would have a yearly pension of £3524 + my state pension of £110 pw. Therefore we would be able to survive and I would look for another job although it is unlikely.

If we do not do this and I manage to keep us going for the next four years I would be eligible for a pension of £4306 and a lump sum of £28,710. However, I would not have the redundancy money and we would have paid all the extra mortgage interest. My husband thinks I should go for redundancy because he thinks that conditions at work will deteriorate over the next 4 years and he thinks we should secure the house now so that we are secure.

I am wavering about it as it seems a little drastic and frightening but I would love to pay off the mortgage. Also wavering about not earning. What would you do in my situation?

getmore4less

you need to look at the number carefully.

Whats the interest rate on the mortgage?
what commutation rate a re you getting on the pension(ie how many £ per year to lump sum)

tesuhoha

We are paying 1.5% at present I think. For every £1 I would get £12 for the lump sum up to a maximum of £25% of the pension.

tesuhoha

There is also of course the possibility that they would not accept me for voluntary redundancy.

golfiematt

you have to decide if 6000 redundancy and not working is better than 16k x 4 years. im not sure they can lower your wage under tupi agreement where you need 12 months notice. you need to look at the sitation in depth and decide if a smaller pension but with 4 years longer is what you would be happy with.

getmore4less

tesuhoha wrote: »

We are paying 1.5% at present I think. For every £1 I would get £12 for the lump sum up to a maximum of £25% of the pension.

12:1 is not a good rate.

OK so that £1py pension can pay off £12 mortgage now but you loose the £1 for ever (is it an index linked £1).

So are you going to live for more than 12 years

I would think if you are relatively fit that the £1 is better used to cover the mortgage payment ofr the 12 years(ok you might not be able to do that but that is a way to look at the trade off).

The problem is there is a big drop in income for 4 years if you take the redundancy now.

If the VR is not enhanced then you will get the same if you wait.

Remember if you don't like the jobs on offer or they change the terms too much you can still take redundancy.

Just because you don't take VR they don't automaticaly get to make you take anything on offer.

What are the chances they will do another round of redundancies?

tesuhoha

What they are saying is that if we are offered a job and we refuse to take it then we will be deemed as having resigned from our job and will not get redundancy. The job descriptions will come out only after people have volunteered for redundancy. The redundancy is only available if we opt for it now or if they don't offer us one of the jobs. Once the restructure has happened there will be no choice. I dont think the redundancy is enhanced.

tesuhoha

The problem is that every 1% extra interest on the mortgage is £65 per month so if if was up to 7% which it could be then I would be paying an extra £400 a month which would be unsustainable.

getmore4less

tesuhoha wrote: »

What they are saying is that if we are offered a job and we refuse to take it then we will be deemed as having resigned from our job and will not get redundancy. The job descriptions will come out only after people have volunteered for redundancy. The redundancy is only available if we opt for it now or if they don't offer us one of the jobs. Once the restructure has happened there will be no choice. I dont think the redundancy is enhanced.

Don't think they can do that, if the jobs are not suitable alternatives you can refuse them and get redundancy(there may be a disagreement on it being suitable but a ET will sort that out).

So you don't take VR they put up the list of jobs and you say none are suitable(if that is the case), I am redundant.

Reduced pay is a good reason to refuse as would be reduced or increased hours.

Remind them that everyone will be entitled to trial periods as well if these are not there old jobs.

How many people are involved, do you have employee reps or union.

Of the people involved is there plenty of overlap on which jobs each could do.
If there is then as they are going to applications(or are they get that cleared up) everyone applies for all possitions or get every one to apply for only the same one.

tesuhoha

Its a school restructure of the support staff. We have it in writing from HR that we will not be given redundancy if we do not accept one of the jobs offered. I'm not sure how many jobs are going in total. The unions are on to it but the management seems to have done the same thing in other schools. There are twelve schools in the area undergoing the same process.

tesuhoha

On the Q sheet the question is

What happens if I am offered a post but do not accept it? Answer - If you do not accept a post, which is offered to you, which is comparable alternative employment to the post you currently do, you will forfeit your right to a redundancy payment.

However, I dont know what they mean by comparable alternative employment. This is a cost cutting exercise.