Success Stories - Pensions

Storcko14

Re salsac. In 2 of my final contracts pre-retirement, IR35 meant that it made sense for me to go direct via the client's payroll and pension scheme to salsac down to NMW. I had some unused allowance from previous years all of which helped to massively boost my SIPP. Just under 80% of my gross rate was tax and NI free.

So, if your circumstances permit, it's well worth checking this out whether you're an employee or a contractor. Especially if you're a contractor and the alternative is an inside IR35 contract with all the costs that entails.

Somebody

On reading forragingfowl200's experience of his mortgage/endowment, I have a story to tell.

We took out an interest only mortgage with an endowment in 1992 (MIRAS was still a thing back then), paying £88 a month for the endowment. Long story short: I learned a bit more on personal finance/financial services and got £6.6k compensation on a mis-selling claim for the endowment. We subsequently switched to a repayment mortgage (paid off since) but kept the endowment going. The endowment matured in 2017 but we we've not yet cash it in. We paid in £26.4k (£20k nett when compensation taken into account); it's now worth £75k+, still growing and still providing a level of joint life assurance. Thought about putting it in trust but will not bother now as will cash in soon to pay for a few business class tickets.

Roger175

https://forums.moneysavingexpert.com/discussion/comment/81964877#Comment_81964877

Interesting post.

Out of interest, what value Mortgage was the endowment backing and would it have covered the IO mortgage in 2017?

We bought our first house in 1985 and had to fight tooth and nail to avoid an endowment mortgage, we kept getting told how great they were, but weren't prepared to take the risk. However, given that everyone was raving about them, we actually took one out as a saving vehicle (to hedge or bets!). It performed dismally in the early years and when we reached a break-clause point after 10 years, we jumped ship and cashed it out. I can't recall the numbers now but I think we just about covered the payments, nothing else.

Somebody

It was backing a mortgage of £68k. We moved in 1996 and that's around the time when I put in a claim for mis-selling, and got an offset mortgage. Endowmant was worth £47.7k when it matured in 2017.

Roger175

Which reinforces the point that endowments were pretty poor investment vehicles. If you had still had the original mortgage, you would have been looking at a £20k shortfall. Remember, these things were sold as the wonder product that would not only cover your mortgage but would leave you with a big lump sum.

Pleased it worked out for you and that you were able to switch and clear the mortgage etc.

tr7phil

We had an endowment mortgage in 1993 for £77 per month covering a £52,500 sum. When all the terror happened over endowments we switched to an interest only tracker mortgage at 0.19% above base rate paying the interest plus £200 per month. The interest rate then proceeded to plummet and I left the payments the same. When the mortgage became payable and the endowment matured in 2018 it paid out just over £48,000 and the sum owing on the mortgage was £21,000 so we did quite well. I know it wasn't the best investment but the thing is, if I hadn't had that endowment at that time it wouldn't even have occurred to me to do any investing at all apart from me pension so overall I am glad that we took out that endowment mortgage.

I actually still have an endowment like policy for £25 per month over 10 year with the Sheffield Mutual Friendly Society which I took out when my endowment finished, at that level it's a tax free investment and it looks like it's going to return more or less double the £3,000 I will have invested with them when it matures. I probably won't take out another though…

katejo

https://forums.moneysavingexpert.com/discussion/comment/81965002#Comment_81965002

In 1993 I walked out on 1 mortgage advisor because she insisted I had to go for an endowment! I wanted a repayment and I got it.

Roger175

We nearly did the same. It was back in the day (1985) when you had to put on your best suit and go and meet the manager of your local Building Society. Having persuaded the manager at our local Abbey National to agree to give us a mortgage, which involved having to prove I had a 2nd job, working weekends for a builder, as well as having to show him my rent book to prove I could meet my half and then my fiancée had to prove she had a pattern of doing overtime, we finally came to the subject of the Endowment. We eventually agreed on a repayment mortgage and they said they would post the forms. When they arrived they were for an Endowment mortgage and so we had another argument before eventually getting the right forms. The problem back then was the Building Society got a large commission from the endowment company, so they pushed them like mad.