32 year till retirement pay our mortgage off Vs NHS pension

Maelwys

Another vote for "DON'T DO IT" here!

Barring a few miraculous stock market picks, paying into the NHS pension scheme is going to be by far your best available means of providing for yourself whenever you're older.

Stopping paying the standard NHS pension fees might give you £430 a month now (before tax? so realistically closer to £258 in your pockets...), but it would come at the cost of several thousand £££ whenever you retire. Unless you and your spouse and any dependants all plan on expiring before you reach your NHS scheme's retirement age, you'd basically be taking money at an extremely bad rate from your future selves.

It'd probably make far better economic sense to cut down on other expenditures if at all possible. Posting a SoA as other people have mentioned would be a good place to start, since it would highlight where all your cash is actually going every month (and a 'struggling' two-income household with one of the parties in the higher tax bracket is virtually always going to have some other means of cutting down!) I'd hazard a guess that even if there are no other ways to cut down, mortgage overpayments would be a relatively straightforward thing to stick on the chopping block in the shorter term.

kidmugsy

kara_p_uk wrote: »

we bought a flat abroad cheap about 36k as it was a bank repo in 2011, it is currently on a spanish mortgage but valued at 70k.

Then sell the ruddy thing, keep up your pension payments, and keep the sort of emergency fund that means you need never look at taking on credit card debt. Or as we used to say in the days of blunt and truthful speech, "just grow up".

justme111

You will not have to work to normal retirement age. By a rough calculation I made reduced pension due to retiring early (60) is more or less the same as if you contributed to private pension. Without accounting for stress, risk and NHS pension other benefits.
Having said that if there is no other way of affording children's activities opting out could be the best solution for you as you need money here and now , not at 60. If I were you and I could not or did not want to find money elsewhere I would have opted out of NHS scheme for a couple of years and reenroll within 5 years. It may be better if only you do it so as to have what you need to spend now and a few £ into emergency savings , not start faffing with overpaying mortgages or private pensions as it would not make sense to forgo better yielding investment (NHS pension) for poorer yielding ones (mortgage and private pension). Specially as your husband is in higher tax rate so benefits even more from pension contributions. If I were you I probably would not have sailed so close to the wind with Spanish property while being only £20 a month in green and no emergency savings

woolly_wombat

You are overexposed to property and carrying the burden of two mortgages, with additional currency risk on your second mortgage at a time when you are stretched to the limit.

Let the second property go. You will have made a small gain but at least the CGT bill won't be too high if you get rid of it now.

You will then be able to:

1. Set up a decent emergency cash fund
2. Start saving a regular small amount each into a SIPP in addition to your NHS pensions so that you can retire early without having to take reductions on you NHS pensions

Things will get better!

DO NOT STOP CONTRIBUTING TO YOUR NHS PENSIONS.

AnotherJoe

You plead poverty (1p at end of month, buy clothes in charity shops !) but have access to thirty thousand pounds you could spend on tennis lessons, Monsoon, Waitrose and Next ?

Sell the Spanish place, you obviously cant afford to fly there anyway, and live your life as you wish on the proceeds and what were the mortgage payments for that.

Number75

You mention a parent each and one grandparent that died young - but not the ones who I expect are still going in retirement!

In fact the ones that died young died during their working lives - so they're actually an advert for the dependents element of a pension.

kidmugsy

I think we're being had. It's a spoof post. Oh the ickle kiddies' tennis lessons indeed.

kara_p_uk

Thanks, I didn't know we could rejoin within 5 years that sounds like it is worth looking into.

We moved house 2 years ago and took a larger mortgage just after that I had to reduce my hours at work as my mother moved away, she was our main childcarer and the cost of childcare for my 13 hour shifts was so much it wasn't worth me being full time so our income reduced but none of this was an issue until the my husbands april pay yesterday when we saw his pension contributions have changed. The £20 in the green is based on his new pension contributions. we bought the spanish property 6 years ago and the cost of this including the mortgage is only 2.5k a year so finding the cash to pay for that outweighs selling it to me.

justme111 wrote: »

You will not have to work to normal retirement age. By a rough calculation I made reduced pension due to retiring early (60) is more or less the same as if you contributed to private pension. Without accounting for stress, risk and NHS pension other benefits.
Having said that if there is no other way of affording children's activities opting out could be the best solution for you as you need money here and now , not at 60. If I were you and I could not or did not want to find money elsewhere I would have opted out of NHS scheme for a couple of years and reenroll within 5 years. It may be better if only you do it so as to have what you need to spend now and a few £ into emergency savings , not start faffing with overpaying mortgages or private pensions as it would not make sense to forgo better yielding investment (NHS pension) for poorer yielding ones (mortgage and private pension). Specially as your husband is in higher tax rate so benefits even more from pension contributions. If I were you I probably would not have sailed so close to the wind with Spanish property while being only £20 a month in green and no emergency savings

kara_p_uk

He has only been in the NHS for a year, previous to that he had 10 years local government pension.

I joined the NHS pension in 2012 and I believe my previous payments are being transferred into the 2015 scheme.

stoozie1 wrote: »

This is very understandable, and again, sorry things are so tight.

However (you knew there was a but coming!)

In the event one of you or OH did go early, the NHS pension does give an amazing spouse and children's pensions, (children's up to age 23 if in education). One person not getting to retirement age is a horrible thought, but with the NHS pension you would be well provisioned. How many years of service will OH have done in the 15 scheme and how many years does he have in 95/08?

kara_p_uk

It really wasn't, my father died suddenly on thursday night of a heart attack then on Tuesday my husband's pay was 130 odd less than last month and when he got his payslip he realised he was now in a higher pension contribution bracket. It has just made us think about whether we want to plan for a future we may not have or whether there is a way to enjoy some of the money now while saving or creating another retirement plan which may not be as lucrative as the NHS pension but would give us the chance to stop working earlier and enjoy life now.

kidmugsy wrote: »

I think we're being had. It's a spoof post. Oh the ickle kiddies' tennis lessons indeed.