S&S ISA Option- please comment on my thoughts

MrsWenger

Hi, apologies for the lengthy post but I would be grateful for your views on an option I am considering please.

We still have 2 joint Santander 123 accounts with the maximum value in them. I am considering putting £10,000 each into a S&S ISA and switching one of the accounts to NatWest for the £150 offer.

We are aged 54 and 52 and are both higher rate tax payers. We have a number of the current accounts which pay interest and regular saver accounts with HSBC, First Direct, Lloyds, Nationwide and Santander. We pay the maximum amounts into each of these every month but some of the money comes from the current accounts; it is not all from salary.

We have cash ISAs with Nationwide and have £10,000 left of this years allowance to deposit.

We have just over £9,000 left on our mortgage which ends in 2021.

My partner has a NHS pension which has been active for 34 years, my pension arrangements are poor, I have a workplace pension where I match the company contribution of 5% each month.

We don’t currently have any investments other than a scheme through my employer where I contribute salary and this buys shares in the company with a 5% discount at the end of each quarter. This is administered by Fidelity.

I feel that the Vanguard LifeStrategy 60 could be a suitable option for us but having read a lot of posts here and elsewhere, I can see there are other options from other companies.

Can anyone suggest which other options to consider and which platform to consider please? Given our current way of saving, should we consider starting with the £10,000 each and then add an amount in each month during the next ISA year or just add the £10,000 as a one-off deposit?

In our position should we consider something different altogether?

Alexland

If you are paying higher rate tax have you considered increasing your contribution into pension(s) to get down to basic rate tax? Is your partner's pension so big they may have lifetime allowance issues?

Pensions are likely to be more beneficial than S&S ISAs although yes VLS60 on Vanguard Investor is a good choice but it depends on circumstances and objectives.

Alex

Zorillo

I'd also consider sacrificing much more of your own salary into a pension and cutting back on regular savers.

But if you're happy with how you're doing things then I think VLS60 would be as good as anything.

MrsWenger

Thank you for you reply Alex.

I hadn’t considered that with my pension, my partner cannot make extra contributions. Does this option depend on either the scheme or my employer allowing me to do that or can I just decide to do it?

Should I consider paying in an increased level and using the £20,000 in the Santander account for the items my salary would be used for?

No chance of my partner being anywhere near the lifetime allowance, she earns around £49,000 and I earn slightly more. I have a company car and healthcare too.

As naive as this may sound, we are not sure what to do for the best but just feel that we should do something to make our money work better for us.

My partner would like to take her pension at 55 but this thought is based on feedback from colleagues who have done the same thing rather than anything else. She would expect to work in some capacity after this.

I have not yet decided what age I would like to retire at.

We would have no issue with talking to an IFA but we don’t know of any recommendations local to us, another challenge!

Thank you for the feedback on the Vanguard topic.

MrsWenger

Thank you for your reply Zorillo.

Happy to investigate all options? As per my reply to Alex’s post, we just feel we could make what money we have work better for us.

masonic

MrsWenger wrote: »

I hadn’t considered that with my pension, my partner cannot make extra contributions. Does this option depend on either the scheme or my employer allowing me to do that or can I just decide to do it?

You could increase contributions made through your scheme (which is the best option if salary sacrifice is available), or take out a separate personal pension or SIPP for the extra contributions. Your partner is certainly at liberty to start an additional pension, even though her workplace scheme doesn't allow additional contributions. If I were in your position I'd consider upping my contributions significantly, keeping an eye on the LTA.

My partner would like to take her pension at 55 but this thought is based on feedback from colleagues who have done the same thing rather than anything else. She would expect to work in some capacity after this.

She might be better off leaving her existing pension in place if she intends to continue working. She could make use of a separate pension in the coming years and put that into drawdown at 55 rather than cash in the potentially more valuable benefits of her workplace scheme.

We would have no issue with talking to an IFA but we don’t know of any recommendations local to us, another challenge!

You can find a local IFA through https://www.unbiased.co.uk/
It wouldn't hurt to identify 2-3 potential options and have an initial conversation. It seems like you could get plenty of value for money from someone who could look at your situation in detail.

MrsWenger

Thank you very much for your reply Masonic.

I will investigate the pension option with work.

Thank you for the link to look for local IFA.

jimjames

If you're putting more into cash ISAs have you looked at other accounts instead? How does Marcus at 1.5% compare to your cash ISA?

MrsWenger

Hi Jimjames, the cash ISA rate is 1.4% so better than Marcus given we pay 40% tax on savings interest.
With all of our money being in cash options I was keen to explore alternatives.

I have been reading up on S&S ISA’s and the Vanguard products hence my original post. We feel we should broaden our horizons and explore what else is available but are not sure where to start.

MrsWenger

Hi everyone,

I have established that my company pension does allow for salary sacrifice so that is good news.

Can anyone advise how best to calculate what contribution I would need to make to move to the lower tax bracket please?

I have looked at a few options online but they don’t cover all of the areas I imagine I need to take into account. These items include a £5,000 per annum bonus which is paid quarterly but not eligible for pension contribution and my company car.

One other thing I have thought of is whether my death in service benefit will be reduced if I commit to salary sacrifice. I will ask Payroll about this. It is not a benefit I hope to take of course!

Thanks again...

greenglide

I would expect salary related benefits such as this to be based on the "reference salary" or whatever it is called in your scheme. This is the gross pay that you would have got if you sacrificed some of it.