FIREside Chats

ElmoR

@Skibunny40

They've announced a change that effectively cuts the pension benefits part by a third starting from 2022.

For me, it now means that my sums no longer add up and it will take til age ~65 to be where I would have been at age 60 until these changes were announced. I'm relatively old in university employee terms too, so am lesser impacted by the younger majority. They will be seriously hit on the pension benefit part - less than a decade ago there was a final salary scheme, and these youngsters (and I) all pay into the scheme to service the staff who've retired on those. In return, a youngster will not get a final salary scheme benefit, they'll get something like a max £400 per year (1/85th) of service towards their pension benefit (but that's also related to salary spine point, so maybe even not that much), and it's going to be capped at 2.5% rather than by any inflation rate. I think I have those details correct?!

For the wider audience, I guess this is the continued beginning (it started in 2016) of the end of a pension benefits scheme that serves 100,000s of employees...

For those that say, 'so what?', DC schemes are the norm - yes, in employment places where you get decent wages. Universities/academics are on much lower salaries relative to other professions where you take about 8 to 10 years post school to reach full qualification/a permanent position. There used to be perks, like autonomy and a good pension, but they've been eroded. It's a very different job to what it was 10 or so years ago.

I feel bad for the young staff. Inter-generational inequality with bells on.

Sorry for being on a downer It's a spanner in the works for FIRE planning...

Skibunny40

Wow, not surprised you're so upset. I know it's the way all jobs are going, but I know what you mean about a smaller salary being balanced by the benefits - you should be entitled to receive what you signed up for.

Retireinten

ElmR

Can I ask what % you pay in for 1/85 accrual rate and a capped inflation increase, out of curiosity.

I'm in the LGPS and I pay in 6.8% on a salary of £46kish for 1/49 accrual and CPI increases.

If they are messing with the USS then the LGPS may follow.  For planning purposes I use my accrued pension value after acturial reduction, on the basis that local government jobs (certainly from my experience anyway) are so unstable currently I just don't feel I can bank on another 6 months in the scheme never mind 6+ years.

 

LadyWithAPlan

It has been suggested some clever person on this forum might know the answer to my query. Does anyone know if when I apply for a mortgage if they look at every bank account I have?

I have my current account where all my invoices comes in which is fine to show proof and statements etc. 

My concern is I do have a separate bank  account at a different bank just for March Betting and there are lots of back and forth payments to bookies and exchanges  which they probably will not like. I know its MB and I make money from it but will mortgage providers go looking at all my bank accounts I own not just  the main one.. 
The bank where I have my help to buy isa is also the same bank  as  this MB acct 

Does anyone know if this will be an issue for me to get my mortgage. Do I need to stop such payments now? 

 I am thinking - as I don't want to stop this extra MB  income stream - I will have to massively throw extra £000s  float money into all my bookies and exchanges then to try to limit the back forth of cash into my  bank acct but as I do extra places on horses the liquidity can be a lot.

Any thoughts or advice gratefully received, I am thinking of buying in the next couple of months. 

becky_rtw

ElmoR said:

@Skibunny40

They've announced a change that effectively cuts the pension benefits part by a third starting from 2022.

For me, it now means that my sums no longer add up and it will take til age ~65 to be where I would have been at age 60 until these changes were announced. I'm relatively old in university employee terms too, so am lesser impacted by the younger majority. They will be seriously hit on the pension benefit part - less than a decade ago there was a final salary scheme, and these youngsters (and I) all pay into the scheme to service the staff who've retired on those. In return, a youngster will not get a final salary scheme benefit, they'll get something like a max £400 per year (1/85th) of service towards their pension benefit (but that's also related to salary spine point, so maybe even not that much), and it's going to be capped at 2.5% rather than by any inflation rate. I think I have those details correct?!

For the wider audience, I guess this is the continued beginning (it started in 2016) of the end of a pension benefits scheme that serves 100,000s of employees...

For those that say, 'so what?', DC schemes are the norm - yes, in employment places where you get decent wages. Universities/academics are on much lower salaries relative to other professions where you take about 8 to 10 years post school to reach full qualification/a permanent position. There used to be perks, like autonomy and a good pension, but they've been eroded. It's a very different job to what it was 10 or so years ago.

I feel bad for the young staff. Inter-generational inequality with bells on.

Sorry for being on a downer It's a spanner in the works for FIRE planning...

Really sorry to hear this @ElmoR - especially since you have been planning so faithfully, is there anything you can do to close the gap to less than 5 years do you think?

ElmoR

Thanks for your sympathy/empathy skibunny40, retireinten, becky_rtw

This is a tale of FIRE and planning and the need for Plan A, Plan B and ...so on !

retireinten - we will be paying 11% contributions from next month.

There must be considerably more LGPS members than USS members - surely your scheme is better managed and didn't do it's last valuation in March 2020. But yes, maybe have a plan B...

Back to the drawing board...

Retireinten

LGPS is fully funded by members and employers including any deficits so I think it is in a healthier position. I am by no means an expert but I think the LGPS is managed differently to many other public sector schemes.  It's still a generous scheme and may get hit again in the future. 

There are no guarantees with retirement planning and the earlier you want to go the riskier it all can be I suppose.  Good luck with your various plans, hope you can find a way to pull some of the loss back

Suffolk_lass

LadyWithAPlan said:

It has been suggested some clever person on this forum might know the answer to my query. Does anyone know if when I apply for a mortgage if they look at every bank account I have?

I have my current account where all my invoices comes in which is fine to show proof and statements etc. 

My concern is I do have a separate bank  account at a different bank just for March Betting and there are lots of back and forth payments to bookies and exchanges  which they probably will not like. I know its MB and I make money from it but will mortgage providers go looking at all my bank accounts I own not just  the main one.. 
The bank where I have my help to buy isa is also the same bank  as  this MB acct 

Does anyone know if this will be an issue for me to get my mortgage. Do I need to stop such payments now? 

 I am thinking - as I don't want to stop this extra MB  income stream - I will have to massively throw extra £000s  float money into all my bookies and exchanges then to try to limit the back forth of cash into my  bank acct but as I do extra places on horses the liquidity can be a lot.

Any thoughts or advice gratefully received, I am thinking of buying in the next couple of months. 

Ahead of someone on this thread knowing 100% I just had a quick look at the main MSE pages and this link helps (points 2 & 11 seem to be the ones) - it suggests that credit checking your score and stopping things like online betting for the three months before you apply (because you need 3 months of statements to meet their tests)

greenbee

Suffolk_lass said:

LadyWithAPlan said:

It has been suggested some clever person on this forum might know the answer to my query. Does anyone know if when I apply for a mortgage if they look at every bank account I have?

I have my current account where all my invoices comes in which is fine to show proof and statements etc. 

My concern is I do have a separate bank  account at a different bank just for March Betting and there are lots of back and forth payments to bookies and exchanges  which they probably will not like. I know its MB and I make money from it but will mortgage providers go looking at all my bank accounts I own not just  the main one.. 
The bank where I have my help to buy isa is also the same bank  as  this MB acct 

Does anyone know if this will be an issue for me to get my mortgage. Do I need to stop such payments now? 

 I am thinking - as I don't want to stop this extra MB  income stream - I will have to massively throw extra £000s  float money into all my bookies and exchanges then to try to limit the back forth of cash into my  bank acct but as I do extra places on horses the liquidity can be a lot.

Any thoughts or advice gratefully received, I am thinking of buying in the next couple of months. 

Ahead of someone on this thread knowing 100% I just had a quick look at the main MSE pages and this link helps (points 2 & 11 seem to be the ones) - it suggests that credit checking your score and stopping things like online betting for the three months before you apply (because you need 3 months of statements to meet their tests)

That’ll give you time to get your online programme done!

LadyWithAPlan

greenbee said:

That’ll give you time to get your online programme done!

ha ) It is moving forward this week - got one big part done, I am planning to do the next chunk this weekend.. I can't give up my MB entirely -  I like it and it makes me extra money...

@Suffolk_lass Tx I had a read of that and from it I moved some cash around as I  decided to increase my bank account floats so they look healthier rather than keeping them lean and all my money in pots. I also have put more into some of my MB accts so less movement between them.

I am eyeing up interest only mortgages just so I could OP the mortgage principal a bit to the nearest £100  but mainly use the £1000/pm difference to  really load up my SIPP and ISA fast  - to be more FIRE and aim to be Mortgage Neutral that way, especially as a HR tax payer and I am over 50. Is this insane? I know I have the discipline to save and really watch my spending. Plus I don't have any dependents so.

Do you other FIRE experts have Interest only or maybe offset mortgages more then repayments?