Busy Mee's Last Leg

Suffolk_lass

Really sorry to hear about the pension choices letter - hopefully will be sorted within a month. I sent mine recorded delivery as a nudge (ie, I know you've got it so no excuses for any delay) on the advice of a number of former colleagues because there have been some problems with CSP contractors since it was privatised.

I see you are considering increased pension contributions will be to your occupational (Alpha) but you could have a SIPP to draw down as cash later (with potential to pass on through inheritance, which your occupational pension does not have) - you would still get tax relief on your contribution but no element from your employer, and 25% of the pot could be drawn down tax free. I guess you also need to consider the total size of your pension pot. I believe Mr Mee could also contribute £2880 per annum to a pension to remove a smidge more from taxable savings.

Busy_Mee1

That is another interesting option Suffolk Lass . How does that work ?. I have always assumed that you have to pay into a pension that your employer deducts at source to benefit from the tax relief.

Suffolk_lass

You put it on your tax return. DH was amazed when he made a lump sum contribution to his teachers' pension and entered it on his tax return in December - he actually rang the lovely people at HMRC to make sure he was not doing something wrong. It works exactly the same way with a personal pension - the big difference is the lack of employer contribution. If you pay in to the occupational scheme they take the contribution before they pay you, and before your pay has its tax deducted. If you pay it into a private pension, you get your tax back afterwards (because you are buying it with tax-paid money you have received).

For Mr Mee - he has a limit he can pay in because he is not working. If he say, took on a part time job he could put up to 100% of his salary into a pension scheme. You only get tax relief on up to £40k p.a. though. And you are aware of the maximum pot size before you pay tax on it. You could therefore both have a private pension (a direct contribution pot each that could be via a pension provider or a SIPP) for which you can claim tax relief on your contributions - then you can withdraw up to 25% tax free, and pay your prevailing rate of tax on the rest as you withdraw it. Or you can keep it there as a tax free investment for your children to inherit. I have not looked into whether they would pay tax on the pot if they inherit it.

Mr Mee will have signed an undertaking as part of his CSP declaration that he will not "recycle" his TFLS into another pension scheme. Given you have other savings this is not a problem.

Busy_Mee1

Thank you SL. That is really helpful. We have never really looked at private pensions because we both have good civil service pensions, however this looks like a really tax efficient way of investing. Certainly worth investigating further.

Busy_Mee1

I am back with a very late update for November. I had forgotten to do it tbh amidst all the celebrations and trips.

November
Repayment Mortgage. £51,030.71
IO. £169,000.00
Total Mortgage. £220,030.71

Savings Nov. 500.00
Total savings. £85,000.00

Savings offset mortgage to. £135,030.71

So that is the final "normal" update, and December will be the first month with Mr Mee as a pensioner. I am reasonably pleased with where we got to. Mr Mee is retiring comfortably and we are nearly mortgage neutral ( more about that in a while). Savings were a little short in November largely due to the late arrival of Mr Mee's pension and lump sum.

Mr Mee's pension and lump sum were revised at the last minute. They called it a "slight" revision, but it transpired to be a reduction of 4.5 k from his lump sum and £600 a year less on his pension :mad: So we are not going to be mortgage neutral by the end of the year, but we will be by mid year.

We currently have money swishing through accounts at the moment, but when it all stops at the end of December, I will be able to set a target for our mortgage neutral date.

In the meantime Christmas is happening. All the presents are bought and I. Must. Not. buy anymore.

I have been to Aldi for a load of their cheap veg and I will go again on Sunday for anything fresh. We are currently eating out of the freezer to make some room for some pre- cooking, so we are having some freezer surprises this week :rotfl:

I had an injection of MFW mojo a few weeks ago and have set up another two regular savers. One with FD for £300 per month (2.75 %). This takes our monthly total of regular savers to £2050. This isn't new saving , but recycling money sat in the mortgage offset to wring extra interest out of it.

I also set up a £125 Christmas regular saver @ 2.75% with Principality BS to funnel money from the odds and sods account. This is new savings and is to focus my mind on the small things and set an aspiration to find £125 a month from Tilly Tidys, TCB etc :T

I think that is all and I really looking forward to setting some new goals for 2020

beanielou

A 'slight' revision means a loss of 4.5k to lump sum :eek:

Busy_Mee1

That was my reaction too Beanie :eek:

Suffolk_lass

beanielou wrote: »

A 'slight' revision means a loss of 4.5k to lump sum :eek:

That's what I thought too!

I was Tilly Tidying to the nearest £50 until DH retired in September. Now I do it once a week to the nearest £10 - I have really noticed the difference. I should just about hit the £120 if I also empty the running costs account at the end of the month but it will be squeaky - worth it though.

You are good with your regular savers. I have three 5% ones that all finish in February - I must take a look for some to take over (they are all recycling).

Busy_Mee1

Morning SL I need to have a wander over to your thread for catch up.

I have been debating whether to stop all the regular savers once they mature next year, because the interest rates are dropping from 5% to 2.75%.
It may well be easier to put a chunk of money into a standard account, for example Metro who pay 1.8 % fixed for 18 months

On balance I think I will probably do a mix of both. Mr Mee's PSA increases to £1000 a year and we will be able to earn £1500 of interest tax free between us with a mix of regular savers and a fixed account. A further £20k a year will be dumped into an ISA.

I also think there is more work unpicking some of these regular savings accounts than keeping them going :rotfl: I have a complicated web of standing orders that swish money through these current accounts to satisfy the eligibility criteria.

I plan on having a good look over Christmas at how best to wring as much interest as I can out of the mortgage money.

I am going to try and get out for a walk with the pup in a while. I haven't taken him out all week through a mixture of busyness at work and the lurgy. My winter cough has arrived and I now sound like I have a 40 a day habit

I am hoping that after today things will quiet down at work as lots of people will go on leave for Christmas.....fingers crossed x

Busy_Mee1

Well all the money stopped swishing through the accounts this morning and I was able to finalise where we are financially.

I have ring fenced £210k for the mortgage, which is about £10k short of being mortgage neutral.

My plan is to continue paying the normal mortgage repayment to the repayment part of the mortgage, whilst also chipping away at the IO part. At the same time I will try to grow the £210k by earning as much interest as I can. The hope is that by the time I retire, not only will there be enough to cover the mortgage but some left over too :T

I have also allocated a £2k slush fund to Mr Mee's current account. His pension is paid later in the month than his salary was, so this will cover the standing orders in the early part of the month. This will also act as a secret emergency fund:shhh:

I have also allocated £4K to the holiday fund, as the cupboard is bare after the Birthday/Holiday trips and we will need to start booking next year's trips in January.

All very satisfying, with a few Tilly Tidies to round the accounts off

I am fed up of feeling rubbish though. I had an awful night last night coughing....just when I think I am turning a corner my cough comes back with a vengeance. Unfortunately the knock on is that I not running, not even walking much and comfort eating rubbish and I need to get a grip.

Lots to do this weekend so need to get a wriggle on