32 year till retirement pay our mortgage off Vs NHS pension

RickyB2000

If only a couple of hundred over, why not just ask to reduce pay by a couple of hundred? Work out how you will afford it at the next pay rise.

kara_p_uk

Thank you. He is at the top of his pay band with no view for this to change in the next few years. We budget and plan well with every penny accounted for which is why it is a shock when we found ourselves with less in the bank this month. It is such a small amount to be over in the next contribution bracket by but has a huge impact on our finances. The spanish property is of huge importance to us as a family and wouldn't be where we wanted to make savings. We decided against renting it out as we didn't want to get into further tax complications in a way we didn't understand.

Thicko2 wrote: »

Dear kara


Jim man's posts have giving the most coherent and accurate position of what you would be giving up if you followed your proposed course of action. I suggest you reflect on this but I would suggest it shows the folly of giving up on the NHS pension.


The contributions bandings of the NHS pension does create a bit of a cliff edge in your particular circumstances. But long term it will create more pension, has he got more increments that makes this a temporary scenario rather than forever?


I applaud the things that you are trying to do for your children in term of lessons etc. You are a victim of the stretched middle, no likely NHS pay rises beyond 1% and trying to do the right things but wanting to keep the holiday home above everything else. Clearly the holiday home drives your financial position to the limit, and a rational choice is which bit of lifestyle to drop. Emotional attachment to the holiday home must be quite high.


How about utilising the holiday home asset. Can you generate £1500 rent per annum to cover the costs to a degree through NHS noticeboards etc?

kara_p_uk

I don't think it would be possible as it is a national agenda for change pay scale but yes this is worth asking. Thanks

RickyB2000 wrote: »

If only a couple of hundred over, why not just ask to reduce pay by a couple of hundred? Work out how you will afford it at the next pay rise.

RickyB2000

MonkeyDr wrote: »

OP, I don't know how much over the threshold your husband is but have you considered using salary sacrifice schemes to get him back below it?

I expect you already get childcare vouchers. Other things include cycle to work schemes, professional subscriptions etc.

I think (but am not certain) that it would reduce pensionable pay and therefore has potential to go back under the cusp and drop contributions back to 9.whatever% in the lower band. You would need to look very closely at the numbers but for some people the calculations work so that you have more net pay (albeit at the expense of a marginally lower pension in years to come), whether you want a bike or not...

I doubt these scheme reduce the headline pensionable salary. Worth asking.

kara_p_uk

do we then pay tax on our pensions if they are over the personal allowance?

jimi_man wrote: »

Hi

With the information you've given it appears that your husband is on just over £48K. If we ignore what he's paid in before and just start from now, by using the NHS CARE Pension formula which is 1/54th every year uprated by CPI + 1.5%, (ignoring inflation and keeping it in today's money) he will end up with a yearly pension of nearly £37K, which will have cost him £134K in contributions (£188K gross). That doesn't take any account of pay rises or previous contributions.

Using your figures, it suggests you earn around £16-17K. Using those figures, gives you a pension of around £12K per year, costing you £38K in contributions. Again no account of pay rises or previous contributions.

I'm sure you can work out the maths but you don't need many years of that sort of pension income to get back what you put in (less than four). That income is index linked, with spousal benefits.

So you are looking at around £50K of pension income between the two of you in today's money. With a further £16K of state pensions, assuming they exist, it gives you quite a reasonable retirement. I don't know how many people on this forum are looking to that sort of income (in today's money), but I suspect you'd be in the upper bracket.

And you want to throw it away to take out a life assurance policy???? And pay extra off your mortgage??

If you've only got 1p to last till you get paid, but you have a second home in Spain then I'd suggest (without being rude) that you need to work on your money management skills!

Don't do it!!!!!

ScoobyZ

Get him to buy a weeks holiday.

It will bring him back down to the 9.3% and he will have an extra week off and be better off. I'm assuming he is top of 8a.

The percentages are due for review in 2019 so might need to do it for a couple of years.

atush

kara_p_uk wrote: »

i've had so many relatives who have never lived to actually claim their pension, it just feels like so much money to pay out when I want to spend money now on letting my children enjoy things. We already shop at lidls by most our clothes from charity shops i move our debt onto 0% cards, i remortgage when our rate is no longer good. I juggle everything to within pounds to be able to afford to go on holidays where we can and to go on day trips I dont' want to pay into a pension but die before I enjoy it

The reasons the people you know died may not be applicable to you. Do you smoke? Drink to excess? Have the Brac cancer gene?

While your spanish pad may have been a bargain, you may have bought something you cannot aford (after all , there must be costs). I own 2 homes abroad and i know how much they cost.

You want to buy your children nice things, but maybe they'd be better off with solvent parents who spend within their needs rather than wants?

Our budget currently includes the cost of flying there and using the flat.

your budget cannot include these things comfortably if you cannot afford the NHS pension. It just meas you are spending more than you earn. There are needs and there are wants. You NEED a pension, you want a spanish holiday home.

Do an SOA, do a spending diary. Consider selling the spanish property at a profit.

atush

kara_p_uk wrote: »

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.

So basically you moved to a bigger house with a bigger mtg? Could that and the holiday home be the source of your funding problems?