New job, pension options - help please?

Gracchus_Babeuf

adrian_bond wrote: »

Hi all!

I've got myself a new job! Hurrah!

A little about me. I'm 30, starting on £30k and have a pension available to me whereby the employer will contribute up to 4% to match my 4%. There is also a death in service payment etc. My investment options are below; (I can spread the percentages into any of my choice)

1. Prudential M&G global leaders fund

2. Legal and general global equity index fund

3. Newton real return fund

4. Legal & general property fund

5. Legal & general over 15 years gilt index fund

6. Legal & general cash fund

7. Prudential with profits fund

I also have been contributing £200 a month (although this has hardly been touched this year, so at present hardly anything) into a cash isa with Natwest. This is worth approx £6300 and forms the rest of my pension. As you can see, I need to get going quickly in Ryder to have any kind of nice retirement! I'm thinking of contributing 6%, together with the companies 4%, and keep contributing £200 a month into my isa. Hopefully in a couple of years (with hard work) I should Hit the 40% tax bracket, so might cash in my Isa then......maybe

Any ideas, insights, opinions and options are welcomed as I would appreciate your input greatly before I make my choices. Thanks everyone

Adrian

The first question I always ask when I read these posts is: what exactly is your job? You talk about being in the 40% tax bracket in a couple of years, but that doesn't tell me much.

The second question is: how much can you reasonably afford to invest?

The third question is: what are your plans regarding property ownership?

kidmugsy

Put enough into the pension to get the full employer 4%. Unless your employer offers salary sacrifice, don't put in more. Stick your spare cash into a Cash ISA in hopes that in May you'll be able to pull it out and buy ILSCs from ns&i. Try to diversify - put your S&S ISA money into different investments than your pension money. (Personally I favour a bit of gold held in an ETF, but others will strenuously disagree.)

And also be sure to have enough in your Cash ISA to act as an emergency fund - say six months' worth of outgoings. Plus all the usual - dump debt, check your insurances, write a will.

adrian_bond

Hi again all!

Sorry it's been so long since my last post.......Xmas kinda takes over everything!
To answer a few of the queries on here from some of you;
I'm 30, single, live alone in my own place (bought 2007 so prob touching negative equity despite improvements), currently have £6000 in a cash isa with Natwest, which I try to pay £200 a month into, but am invariably taking back each month (I know, I need a slap!)
I get to remortgage in may, and should finish my 5 year fix which is stuck at 5.53%. At the mo my lenders svr is spprox 3.5% when I last checked (npbs).

My latest thinking is to take the easy and irresopondible decision to invest 11% of my salary to match my employers 4%, then to pay any additional moneys I can into my cash isa when I can instead of the £200 a month I currently try to. It's clear the temptation is too strong as I keep dipping into it like its savings, not a pension.

Now, back to the investment choices. I think the general consensus was in agreeing that I should split

1. 30%
2. 30%
3. 10%
4. 10%
7. 20%

As I said earlier, I am hoping to bridge into the 40% tax bracket in the next 5 years, so will have to reassess accordingly then. I was thinking that having a cash isa built up when paying 20% tax was a good idea, then paying it into the fund once the 40% bracket was reached to obtain 40% tax relief on the entire pot. Am i wrong in assuming this?

Anyway, please let me know your opinions guys as I'm going to fill out the paperwork over the next two days with my investment choices. Thanks again

Adrian

atush

For your savings, try putting 100 into the isa each mont (to NOT touch) and put 100 into easy access in case you need it? Otherwise, a monthly regular saver of 100 would keep some of it safe from temptation. But once you are putting 11% in your pension each month you may find at forst you don't have that extra left over. unless you cut back on some spending?

adrian_bond

Thanks atush,

That's a good idea. The actual cost to me to setup the new pension will be £220 a month - with tax relief and the employers contribution that gives £375 a month into the pension which should be sufficient for now I hope (will increase later)

The existing £200 Isa contribution can be pulled apart once this is in place. A second account for holding the cash is a very elegant solution as it will stop the dire situation of investing and withdrawing that happens sometimes! Thanks

adrian_bond

Hi again everyone,

Back to the original post.....do you think my splits and weighting sound credible (full 15% investment; 4% employers, 11% my contribution).

Thank you everyone

adrian_bond

Cheeky bump!

Hope everyone has had a good weekend. Going to hand in the paperwork at the end of play today hopefully, unless anyone has any further suggestions? Thank you everyone! Fingers crossed it pays off!

bigadaj

Hi there, just some observations on the information you've given, you could have other circumstances that may render my comments unnecessary.

If the cash ISA is your only cash savings then I would want to save more cash initially, as a safety buffer if anything goes wrong.

Secondly if you are in negative equity then overpayments on the mortgage would be a priority for me after cash savings, as when you come to re-mortgage then the percentage equity you have will have a big impact on the rate you can get.

Therefore I would pay the minimum amount in to get your employers contribution, save spare money as cash (ISA, regular saver etc) and try and overpay the mortgage for a while. You can always up your pension contributions in a year or two but cannot access that money until you are 55, or probably older when the time comes.