Still don't get the salary sacrifice thing....

clairehi

fimonkey wrote:

what's in it for me to join this scheme but loose a part of my salary which i can't really afford to do so at the moment.

The TPS is a vg pension scheme and well worth joining for the free contributions from your employer and the excellent defined benefits on retirement. Joining it should be a priority!

Under the new rules (Jan 07) if you stay in your job at same salary until retirement at 65 it would give you an index linked pension of over £16K (todays prices). It would cost you a lot more to achieve this through a personal/stakeholder pension with no employers contributions. Please think hard before deciding you cant afford it.

fimonkey

honestly I KNOW I will join it soon, but as a potential FTB, in a very expensive area then I cannot afford to 'loose' 7.1% of my salary! Especially inrespect of mortgage applications and how much I'll be able to borrow.

Once the mortgage is in place and repayments are comfortable, I'll be able to take the reduction in salary.

Andy_L

Many mortgage companies understand salary sacrifice and allow for it in calculating salary multiples.

But, if you can't afford it you can't afford it. The danger is that, like so many people, there'll always be something else to spend the money on & you're never start saving for retirement.

Also, some public sector schemes have rules that require you to join soon after being eligible (2 years?) or you can never join.

As a halfway house you might be able to get them to pay the 5% employers contribution into an alternative scheme.

fimonkey

yes they'll pay it into a stakeholder scheme (and I match their 5% with my 5%) which brings me onto my next question.

I WILL join teachers next year (by which time I'll be 31yrs young). Is it sensible for me to put the 5% into a stakeholder for a year only?

Many thanks all.