Don'y think I'm making best of my savings/investments set up

Paperwhite2007

Hello all and thank you for reading.

Can anyone advise on how to make my savings work best for me. I want to keep a cash emergency fund and also don’t want all my money tied up and inaccessible, but I know I need to do some restructuring.  I think I need to transfer some cash into my pension but I am not sure how much.

Age:  47

Salary: circa £80k pa (am freelance)

Savings: £115k inc £34k in a S&S ISA with Nutmeg.  Rest of cash in ISA saving accounts and some fixed term savings accounts which are coming to an end soon. 

Pension: £20k in an old workplace scheme and £27k in NEST account. 

Mortgage- £125k on a mortgage to be completed in 2027 and £125k in a mortgage due to complete in 2038. House currently worth £900k (London). 

Debt: No debt other than mortgage. 

After bills, living expenses and putting money away for annual holiday/Christmas etc (also am chief breadwinner) I have about  £1500 pcm to put in pension/investments/savings.  Principal concern is to plan for retirement as I spent 20s being skint and 30s having children so my pension is woeful.  Don’t expect to retire particularly early but want to be able to work more part time from 55 ish onwards but not sure that’s possible. We may relocate at some point to a cheaper area of the country (we’re in London). 

eskbanker

You seem to have adequate provisions for the present and short to medium term future, so the obvious area for improvement is the longer term, i.e. retirement.  I can't think of any reason why not to commit the monthly £1500 to a pension, so if your freelance status means that you don't have access to a workplace scheme then open a SIPP at the earliest opportunity....

steampowered

As you are a higher rate tax payer, it makes sense to contribute the maximum amount possible into a pension, so that you can take advantage of 40% tax relief.

davieba

Sounds like a similar position to me, I'm a freelancer and I'd recommend increasing your pension provision to take advantage of the tax benefits.

Albermarle

As a higher rate taxpayer , each £100 going into your pension only costs you £60 .
When you come to take the pension , you will most likely pay 15% tax on it ( although it will depend on your circumstances at the  time ) so you will get £85 back for £60 ( disregarding any investment growth etc ) 
Your pension provider will add basic rate tax relief and you will need to claim the higher rate relief by contacting HMRC .
Initially you will probably get a refund but then they will adjust your tax code so you see the benefit in a higher net pay .
The higher rate relief does not go directly into the pension but back in your pocket.
NEST is unusual in that takes a cut of your contributions ( 1.8%) but has a low ongoing charge of 0.3%.
It could be you could still contribute to the other old pension and if you ever wanted to, it is very easy to open a new one online.
Main thing though is to increase the contributions to take advantage of the very generous tax relief for higher rate taxpayers , as possibly it will not exist forever. 

Thrugelmir

What's your partners financial position like? The overall position needs to be considered as well. 

Paperwhite2007

Thrugelmir said:

What's your partners financial position like? The overall position needs to be considered as well. 

He earns a lot less than I do and doesn't have any plans to try and increase his income.  Like me started paying into a pension later than he should have done, but he does have savings too.

Paperwhite2007

eskbanker said:

You seem to have adequate provisions for the present and short to medium term future, so the obvious area for improvement is the longer term, i.e. retirement.  I can't think of any reason why not to commit the monthly £1500 to a pension, so if your freelance status means that you don't have access to a workplace scheme then open a SIPP at the earliest opportunity....

Thank you so much. Should I transfer some of my savings into my pension?  I was thinking of moving over 10 or 20k.  I have an old workplace pension which is dormant, and the NEST scheme is one that a lot of my employers pay their contributions into (I often work on one project for a few months at a time so am lucky there even though they pay the minimum amount).  But I do wonder about opening a SIPP - I don't where to start really.  I need to find an advisor that specialises in pensions!

Thrugelmir

Paperwhite2007 said:

eskbanker said:

You seem to have adequate provisions for the present and short to medium term future, so the obvious area for improvement is the longer term, i.e. retirement.  I can't think of any reason why not to commit the monthly £1500 to a pension, so if your freelance status means that you don't have access to a workplace scheme then open a SIPP at the earliest opportunity....

 But I do wonder about opening a SIPP - I don't where to start really.  I need to find an advisor that specialises in pensions!

Take a look at Vanguard.  Don't use them myself. However they are an ideal place to start until one finds one feet and feels confident enough to broaden ones investment horizons. A solid low cost option. 

Albermarle

But I do wonder about opening a SIPP - I don't where to start really.  I need to find an advisor that specialises in pensions!
All financial advisors know about pensions, but you do not need one for two reasons
You have not really built up enough in the pensions to make the cost of an advisor worthwhile . Get the contributions increased as first priority.
Some time learning about the basics of investments and pensions would be much more beneficial. You can start here.
https://www.moneysavingexpert.com/investments/
https://www.moneyadviceservice.org.uk/en/categories/pensions-and-retirement
By the way your old pension is not dormant just because you have stopped contributing to it .. It will still be invested and there will still be fees being charged