Pension Mess - Not sure What to do

cosmicDolphin

xylophone wrote: »

Have you arranged buildings insurance? And contents?
!

Well yes that was mandatory, Solicitor needed all those to complete the conveyencing

[QUOTE=xylophone;56806473
Why do you take pride in this "swimming against the tide"?
[/QUOTE]

That's a deep one...Maybe it's my non-conformists aethiest soul

xylophone

Has the non-conformist employer got moving on the pension? (AKA old age insurance.....)

Thrugelmir

cosmicDolphin wrote: »

Well yes that was mandatory, Solicitor needed all those to complete the conveyencing

Nothing to stop you letting the policy lapse.

Why pay for something you may not need?

Linton

cosmicDolphin wrote: »

It's not that simple because with a std mortgage you'd be paying 3% interest on your £1,000 for the remainder of the term so the interest is saved not only in that year but all the subsequent years remaining..

After a few years your overpayments you would/should exceed the amount you're allowed to pay into tax free savings each year. i.e. we overpayed by £800 last month due to my bonus being paid and avaraged £4k overpayment per year at the old house.

As they haven't figured out how to tax us on interest not incurred yet, effectively it's also tax free unlike any savings outside of your £11k per year isa limit.

If we can overpay by an average of £400 per month , that will reduce the term by approx 10yrs , saving around £80k in interest.

If we put £11k maximum ( which we would take a few years to build up to anyway ) into an isa @ 5% ( and I'm being generous here because I don't see any over 4% and that's locking-in the money so bang goes your emergency useage ) then that would earn just over £8k in interest over the same 15 years it took to pay the mortgage off.

So £80k of interest saved vs £8k interest earned....I know which one I prefer.

Yes you could put subsequent years savings elsewhere but you'd get piddly interest and be taxed on it. Far more efficient to whack it off the mortgage and I can still access it if I want without any penalty.

You seem a bit confused. You have £400/month which you can either use to overpay the mortgage or you can invest. Note I did say invest - that means an S&S ISA investing tax free in funds/shares. The limit for an S&S ISA is twice that for a cash ISA. 5% is a fairly low average return for S&S investment.

£400/month gaining 5%/year will give you a pot of about £106000 after 15 years. If paying an extra £400/month enables you to pay off your mortgage in 15 years I think you will find that the invested pot is more than enough to cover the whole of your remaining mortgage after less than 15 years if you didnt overpay. Suggest you try some Excel modelling.

xylophone

And see post 73 above...

cosmicDolphin

xylophone wrote: »

Has the non-conformist employer got moving on the pension? (AKA old age insurance.....)

No, I'm home based and he's never there so we haven't synced our diaries yet..

cosmicDolphin

Thrugelmir wrote: »

Nothing to stop you letting the policy lapse.

Why pay for something you may not need?

One year I forget to renew the Buildings Ins. and the Mortgage Co threatened to forclose the mortgage.

Plus I have collected alot of stuff over the years that would be expensive to replace in my recording studio.

That's why.

xylophone

in my recording studio.Plus I have collected alot of stuff over the years that would be expensive to replace

Your wife might find it expensive to replace you (or indeed you your wife)....

he's never there

:eek:

Tomorrow never comes....

cosmicDolphin

Linton wrote: »

You seem a bit confused. You have £400/month which you can either use to overpay the mortgage or you can invest. Note I did say invest - that means an S&S ISA investing tax free in funds/shares. The limit for an S&S ISA is twice that for a cash ISA. 5% is a fairly low average return for S&S investment.

£400/month gaining 5%/year will give you a pot of about £106000 after 15 years. If paying an extra £400/month enables you to pay off your mortgage in 15 years I think you will find that the invested pot is more than enough to cover the whole of your remaining mortgage after less than 15 years if you didnt overpay. Suggest you try some Excel modelling.

Well firstly there's never any monthly fixed amount I can commit to, it's just whatever's left over at the end of each month. In sales jobs where pay can vary quite substantially depending on bonuses you need the flexibility to pay more when you can , or have it back when you can't. Sure on average I've always overachieved but it helps smooth out the peaks and troughs to overpay and overdraw at will.

Plus it's not a sure thing you'll outperform the mortgage reduction. I can see from the figures that it may well be the case. But then again when I joined Equitable Life they were one of the top performing pension co's over the previous 100 yrs and look how that turned out.

Whereas the overpayment is zero risk option and if mortgage rates rise which they will surely do in the next 15 yrs then the interest saved increases.

But I certainly like the idea of the S&S Isa, I took part in a 3yr Sharesave Scheme once...maxed it out and almost doubled what I paid in. The poor folks who took the 5yr option only got their money back and some interest as the shares plummeted in yrs 4 & 5.

I think you need a bit of luck for these things.

cosmicDolphin

xylophone wrote: »

Tomorrow never comes....

20 months ago I told him how much the Co. would save by switching to fuel cards rather than re-imbursing the Reps their diesel .

He fully agreed with it at the time....and just got around to it this month....for an £18k per year saving.

So I don't expect anything to happen very quickly, I've worked at normal companies and this isn't one.