Pensions - Baptism of Fire

mr97

I assumed this forecast meant my state pension of £175.20 was safe. Obviously I will still pay NI contributions (after uni) but my understanding was that I'd paid enough contributions over the required period of time (35yrs).  In fairness, my understanding of pensions (including state pension) can fit on a postage stamp.  I'm prone to worry because I feel there's so much I need to learn and with all this, I'm a fish out of water.  

RetSol

xylophone said:

I have quite a bit of money that I want to be careful with and use to invest in my future.  I know there must be some investment plan that will suit my situation/requirements and will certainly work better for me than letting it stay in an average bank account.

Would you benefit from financial advice from an IFA?  This would be tailored to your specific circumstances.

https://adviserbook.co.uk/  

You would tick "confirmed independent" and any other specialisms required.

In my experience (in London), an IFA will only be interested in advising you if you have at least £250k to invest.  It may be different in other parts of country where their overheads are lower. However, if you have a substantial sum to deal with, I think that an IFA is well-worth considering.  Most IFAs will give you an introductory meeting without charge.  I met with a couple of IFAs recently and found the introductory meeting to be a useful source of information even though I did not end up using them.  I have taken the DIY route for my financial planning but I have spent a lot of time on it.  I have been an investor for decades so I had some experience but nonetheless I have found the process complex and time-consuming.  As a worrier myself, I have probably spent a bit too much time and energy on trying to ensure that I have all the bases covered.  The Internet makes financial management easier in some ways but the options available can seem a bit overwhelming.  You may have discovered them already but I have found https://www.moneyadviceservice.org.uk/en and https://www.which.co.uk/money to be good.  As well as MSE, of course!
It sounds like you have made it over the line with your state pension.  Congratulations! 

mr97

RetSol - thank you so much for the advice.  I  guess it wouldn't hurt to try an introductory meeting with an IFA. Having spoken with my friend ealier, his advice echoed your earlier comment - he knows only to well that I worry.  I worried when I was skint and I worry when I have money - there's surely a message i need to learn about life. Looking at my options I tend to feel overwhelmed as the more I learn about investing the more complex it becomes.  The info you added (website info etc) I take a look at and generally take my time. Sorting Uni stuff is stressful enough at the moment - especially during lockdown - so I will take a deep breath and adopt a leisurely appraoch to all this as I've found myself running at this as if time is of the essence and it's never good to act in haste. 

Thank you.  I'm learning slowly but surely.

Have a great weekend.

Albermarle

I assumed this forecast meant my state pension of £175.20 was safe

That means you are OK .

In my experience (in London), an IFA will only be interested in advising you if you have at least £250k to invest. 

That seems a bit of a high bar but you could be right. 

From other threads, something like a minimum £50K applies in the 'regions' 

mr97

Thank you Albermarle

I think I will look at exploring a few options regarding advice.

Durban

If you graduate and work as a MH nurse in the NHS until 67 , you will have around 10 years of an NHS pension.
This is very valuable. It will be guaranteed and inflation linked for life. 

Good luck with your studies. I'm sure that you'll do very well because you'll be able to empathise having had mh difficulties yourself

mr97

Thank you, Durban.  This is my dream to become a mental health nurse.  The NHS pension will be an added bonus if I reach my goal. It's all late in life due to circumstances but I'm aiming to do the best I can.  

mark55man

Hello - and yes it is very complicated. But although I don't suffer anxiety and worry myself I have close family who do, so I am both sympathetic to your concerns and impressed with how much of the nettle you have grasped.  So some simple basic points 

* You have a full state pension - this is an excellent building block many people do live off this without any other assets - very tight, and not very comfortable but doable.  More doable in a partnership (mrs97 or another mr97 whatever) 

* If you plan to work for 10 years of so comes to fruition (and I hope it does - god knows the NHS needs more MH specialists) then that would add a hugely useful extra slice of guaranteed income to you pot.  Perhaps one of the other posters might indicate how much that would be - 10 years at £30K would be about £5K p.a I think - I don;t know details of current scheme but of that order)

* As you don't need to fill in a gap in your state pension then doing the £3600/£2880 net thing is a simple quick move that cannot be backdated so you should start ASAP (assuming there is no other reason you need the money).  As an aside the £3600 is if you have no taxable income.  If you have taxable income (not sure if you are planning to work alongside your course) then even (say its £7.2K) if its all within your personal allowance you can invest that into your pension (ie pay in £5760 net for £7200 gross

* The basic difference between an ISA and a Pension is that an ISA is funded with  taxed income which you withdraw tax free when you need it (flexibly) and a pension you pay into with non taxed income but withdraw taxed income.  Therefore your tax position when you retire is important.  From the above it looks like you will be a little over the current personal allowance - ie state pension £175*52 = £9K + £5K from your NHS pension = £14K currently PA is £12500 so IF they both rose in alignment you would pay 20% tax on the excess over your PA.  This means any additional pension savings you make into your money pot will be largely neutral (there is a small advantage to the pension as when you take a lump sum out the first 25% is tax free).  There are other ISA offerings eg LISA etc that provides an equivalent  bonus.  You just need to work out the cash flow / tax ins and outs

* An additional factor, is all the above are just mechanisms/platforms for your money.  You don;t need to worry about state or NHS pension (Thats what the DB is - its their investments, you just get the income).  For the others, whether you go into ISA, LISA, or one of the many types of pensions then you  need to work out what you are going to invest in.  That's a whole different thing, based on personal factors.  The key ones for you are the relatively short term you have to invest (means less time to grow/recover), the need to preserve your capital (so a less risky profile), the need to have a balance of investments.  I suggest that  might be something to worry about later, and maybe replicate what you have now (but note that all cash for 10 years will cost you as inflation erodes your pots) 

That's enough for now - hope this is helpful

hugheskevi

One thing to remember for the future...you can transfer-in external pensions into the NHS pension scheme, but only during the first 12 months after joining. So after a few years of £3,600 into a Defined Contribution pension, you could then transfer that into NHS scheme if you do take up NHS employment.

RetSol

hugheskevi said:

One thing to remember for the future...you can transfer-in external pensions into the NHS pension scheme, but only during the first 12 months after joining. So after a few years of £3,600 into a Defined Contribution pension, you could then transfer that into NHS scheme if you do take up NHS employment.

I was going to point out that this is likely to be a sensible move.  In addition to my db pension, I have a small-ish defined contribution pot which I only built up in the 5 or so years before "retirement".  I built up the dc pot only because the opportunity to receive hefty employer contributions arose.  I am finding that managing a small-ish pot is a bit of a pain as I like to keep things simple in life but nothing about pensions is simple!