My penison for University fees??

Nick9967

I'm 50 this year , have 2 young kids, one 13 one 9 , very likely they'll end up going to University, everyone I talk to family and beyond tells that if they "borrow" on what ever scheme is running then, the full university fees etc as students would normally do, I will still need to top up around £5k per year for each child for extra expenses , living etc etc. so that's likely to cost me around the £30k mark between them ( 2 * 3 years* £5k) as its extremely unlikely that I can put that sort of money away in time. However I do put a reasonable amount in my pension (6% from me and same from employer so £624 p/month net) , by 55 it'll be worth in the region of £200k (£148 now) . My point is that I have it fixed in my mind that the best thing for me to do is continue with this and when I'm 55 (perfect timing for the 13 year old) I take from my pension the first £15k to help him through then when the 9 year old is ready do the same again. It is totally logical in my mind but I'm no financial or pension expert. Has anyone else done or planning to do something like this ? any advice would be gratefully received.

LHW99

Does depend what they are used to. We topped up, but less than half that amount - any more wanted, they had to get a part time job - and both did.

stoozie1

we're planning on using our TFLS for uni fees/maintenance top ups like you are. Ours are 8, 7, 4 and 3.

The only thing I would say is, can you then manage in retirement on what you'll be left with, or do you need to add to your pension contributions now to have enough 'spare' for the children?

You know you reduce your 'residual earnings' by the gross amount paid into your pension, and there is a further £1200 reduction for a dependent child still at home? (so your contribution level may be lower than you fear)

Nick9967

coincidentally, I'm planning on giving up the commuting and stress full job at 55 and go to work as a posty or similar, so actually the less I have to contribute to uni the better off I'll be in my late 50's.
stoozie 1: I'm not entirely sure what you're talking about with this statement - probably cos I'm being a bit thick?
You know you reduce your 'residual earnings' by the gross amount paid into your pension, and there is a further £1200 reduction for a dependent child still at home? (so your contribution level may be lower than you fear)

stoozie1

I probably didn't explain it properly!

The amount you need to top up your children's loans by is reduced by how much you pay into your pension (grossed up) and you get an extra allowance for a child still at home.

So when you are means tested, it's salary minius grossed up pension conts (and gift aid conts) and for child 1 minus an additional £1200 for your child still at home.

So I'm saying your means tested amount may well be lower than you think, so your children may well get more loan than you fear.

here's how MSE describes residual income:

Residual Income

Both the loan and grant available to full-time students depends on their households' residual income.

Are you an independent student? If you're over 25 or have financially supported yourself for more than three years, have no living parents or are caring for a child or are without living parents, you're an independent student and will be assessed on your income (or if married/civil partner it depends on your joint income with your spouse).

It depends on your parents' income for everyone else. For all those dependent students (ie, not independent) then the income assessment is based on your combined parents' income. Though if you have substantial savings/investments of your own generating income, they will be taken into account.

If your parents are divorced or separated then they will assess the income of the parent you live with most of the time (if that's not clear cut, it's at the discretion of your Local Education Authority) – if that parent remarries or has a cohabiting partner, their joint income will then be assessed.

What is residual income? This is effectively the household income BEFORE tax and AFTER any pension contributions or allowances for dependent children.

This is only a short summary; there are other facts that may be taken into account. For full information see gov.uk.

OldMusicGuy

Most important thing is what other pension provisions do you have. Do you have defined benefit pensions that will come into play at some point, or is the £148K (now) fund all you have in addition to the state pension? You need to think about what will happen to you in retirement over 20 to 30 years or longer. It's tempting to take money out of the pot without fully thinking through the long term consequences.

FYI my son has just finished at uni and he took out a loan for fees but we paid his accommodation costs and also gave him a living allowance which worked out at about £9K per annum.

jamiehelsinki

Your pension contribution seems really low to me for what your earning, I'm guessing giving the figures you quoted your on about 50k yet your fund is only at 3 times this at 50 and you plan to use some of it for your kids uni costs, would this leave you with enough in retirement?

It might be you have other pensions not mentioned here though.

Nick9967

thanks guys usefull, no that's the only provision I have (plus a mortgage free house which is another 350+)
you know what the more I look into the more I think if things stay as they are with fees etc it would pay me to jack in the stresfull job with its commute , get a lower paid, stress free job , this would allow the kids to take more on a maintenance loan, of course the downside is they'll have that debt for longer! anyone want to buy some kids!!!!!!

armchaireconomist

As noble as your suggestion is, perhaps they should just get jobs and pay their own way? Many of us did.

chiefie

Great way of saving if you are a 40% tax payer

OldMusicGuy

If that's your only pension provision, I would be very wary of taking big lumps out of it unless you are happy to continue working into later life. It's not a massive amount.... Although maybe your partner has something?