Help please for clueless mum who just inherited 41k

xylophone

The OP has a Defined Benefit pension - she appears to be employed in the Police Service - this could mean a police pension or possibly a CS pension - either way, I don't think that she fully understands it or the benefits it offers to her widower/ children (in the event of her death while they were still her dependants).

With regard to her husband's pension, I agree with Albemarle's post above.

steampowered

You could open a SIPP, which would have the advantage of giving investment returns (pension investments might return on average 6% per year over the long term) and tax relief (a 20% top-up from the government, assuming you are basic rate tax payers). That makes the SIPP a more profitable route than paying off the mortgage early, if you are happy to lock the money away until retirement.

It sounds like your husband is effectively putting 7% of his salary into a pension each month. He will be working for perhaps 45 years (20 until 65), and retired for another 35 years after that. So the pension is definitely a good start, but not really enough to fund a good retirement, so at some point he may wish to increase his contributions. 

It might be worth investing a few hours of your time reading statements and information online so that you have a better understanding of your pension situation - best do that now rather than waiting until just before retirement when it will be too late to change anything.

Another option is to put the money into a stocks & shares ISA each. Over the long term you would expect to get 5-6% per year from a typical medium risk investment - choose an investment fund which is diversified across lots of different companies, so that you minimise your risk, as if one company goes under that will only be a small part of the portfolio. The big advantages of choosing a stocks & shares ISA over BTL are that they are hassle free (no tenants to deal with) and tax free (compare that with BTL where you will be paying higher rate stamp duty when you buy, capital gains tax when you sell, and income tax each year on the rent).

happymum37

DiggerUK said:

I'd forget the stories of easy revenue from a BTL. When it's good it's ok, but if it turns problematic it becomes a nightmare.

You are both o.k.ish regards pensions, especially you. A few pay rises/promotions and the like will see you provided for. Private pensions (AVC etc) are not all they are cracked up to be, make alternative plans for retirement savings.

You now have enough to kill the mortgage and increase your cash flow. At the same time you will make the roof over your head a bomb proof safe security. Please, clear the mortgage first..._

Thank you.  Brilliant advice. 
My pension however isn't that good.  Its a police one, yes but I have had a 6 year gap of not paying into it and I'm part time. 

I think we will pay half off the mortgage and possibly half into husband's pension... or more like 60-40 split

Thanks again.  

happymum37

xylophone said:

The OP has a Defined Benefit pension - she appears to be employed in the Police Service - this could mean a police pension or possibly a CS pension - either way, I don't think that she fully understands it or the benefits it offers to her widower/ children (in the event of her death while they were still her dependants).

With regard to her husband's pension, I agree with Albemarle's post above.

Your right I'm rather hopeless at all of this!! Thank you for the reply. 
I have a police service pension but I have had a 6 year career break and only paid in part time. I know my husband and kids do get a pension if I die but it's not the full amount I would get if I were alive. 
Thank you

happymum37

steampowered said:

You could open a SIPP, which would have the advantage of giving investment returns (pension investments might return on average 6% per year over the long term) and tax relief (a 20% top-up from the government, assuming you are basic rate tax payers). That makes the SIPP a more profitable route than paying off the mortgage early, if you are happy to lock the money away until retirement.

It sounds like your husband is effectively putting 7% of his salary into a pension each month. He will be working for perhaps 45 years (20 until 65), and retired for another 35 years after that. So the pension is definitely a good start, but not really enough to fund a good retirement, so at some point he may wish to increase his contributions. 

It might be worth investing a few hours of your time reading statements and information online so that you have a better understanding of your pension situation - best do that now rather than waiting until just before retirement when it will be too late to change anything.

Another option is to put the money into a stocks & shares ISA each. Over the long term you would expect to get 5-6% per year from a typical medium risk investment - choose an investment fund which is diversified across lots of different companies, so that you minimise your risk, as if one company goes under that will only be a small part of the portfolio. The big advantages of choosing a stocks & shares ISA over BTL are that they are hassle free (no tenants to deal with) and tax free (compare that with BTL where you will be paying higher rate stamp duty when you buy, capital gains tax when you sell, and income tax each year on the rent).

Thank you 
Your right i really do need to pay more attention to the pension ins and out.  Husband has a nest pension I think  . Are we not better paying into that more rather than opening up another pension?

Best wishes and thank you

happymum37

Albermarle said:

Husband has a pension with the government - sorry I'm so clueless with its name but his employer pays only about 4% and he pays 3%. 

We need a bit more clarity on this.

Normally when someone says they have a pension with the government, it means they have a Civil Service final salary scheme, or similar . ( Like you have I think)

However the contribution % you mention for your husband would indicate this a standard auto enrolment scheme with a private employer ?

I suspect the pension is with NEST ? which is not actually the government but is government sponsored. Is that correct ?

Thank you so much.  I'm a total spud with all this.  
Yes its a nest.  Apologies for the confusion. 

xylophone

 Are we not better paying into that more rather than opening up another pension?

It is not difficult to open another pension but your husband might prefer the simplicity of  just one scheme. 

https://www.nestpensions.org.uk/schemeweb/memberhelpcentre/contributions/make-additional-contributions.html#:~:text=There'll be a contribution,contribution into your retirement pot.&text=To make an additional contribution,or a single additional contribution.

I know my husband and kids do get a pension if I die but it's not the full amount I would get if I were alive. 

You want jam on it?

More seriously, a widow(er) pension is usually around half of the pension of the deceased member.

https://www.kentpensionfund.co.uk/police-officers/police-pension-scheme-2015-pps-2015/current-member-paying-in/death-benefits

The above is an example of a police pension - looks pretty generous to me!

Albermarle

NEST is deliberately a simple workplace pension . They have an easy explanation of pensions in general here 
https://www.nestpensions.org.uk/schemeweb/nest/members/about-pensions.html
 However if you check their website ( or your husband has on line access ) you will see that they have a choice of funds ( not many) so he should at least be aware where is money is invested even if he is not that interested/does not understand it that well.
https://www.nestpensions.org.uk/schemeweb/nest/aboutnest/investment-approach/other-fund-choices.html
A more experienced investor could benefit by transferring to a different provider but in your case the priority is to just start him putting more in it . Either as a lump sum or by increasing his % monthly contributions . They will be 5% now ( increased recently) so maybe go to minimum 10% or 15% .

dd95

not a personal dig but i would take a forensic look at your finances if you have 2900 coming in each month and only 500 left after bills etc where you mortgage payment is only 440?

happymum37

xylophone said:

 Are we not better paying into that more rather than opening up another pension?

It is not difficult to open another pension but your husband might prefer the simplicity of  just one scheme. 

https://www.nestpensions.org.uk/schemeweb/memberhelpcentre/contributions/make-additional-contributions.html#:~:text=There'll be a contribution,contribution into your retirement pot.&text=To make an additional contribution,or a single additional contribution.

I know my husband and kids do get a pension if I die but it's not the full amount I would get if I were alive. 

You want jam on it?

More seriously, a widow(er) pension is usually around half of the pension of the deceased member.

https://www.kentpensionfund.co.uk/police-officers/police-pension-scheme-2015-pps-2015/current-member-paying-in/death-benefits

The above is an example of a police pension - looks pretty generous to me!

Lol I just meant maybe we should over pay his pension not mine!!🤣🤣

Thank you for the advice