FIRE Girls Pension Diary - Aim High & Dream Big

Alexland

kempiejon said:

Catch me up on that please, I didn't see they've been changed for the worse.

https://forums.moneysavingexpert.com/discussion/6644629/new-isa-limits-advice

https://forums.moneysavingexpert.com/discussion/6642890/hmrc-will-stop-cash-like-investments-in-s-s-isas

TL;DR A tax/penalty to pay on cash balance interest, a transfer restriction and worse of all is the cash-like restriction which will probably stop investors owning money market funds, short term bonds and more importantly executing their risk management strategies such as gradually reducing risk as they approach withdrawal.

kempiejon

Thanks @Alexland I can't see that'll affect me adversely but I'll wait and see, it's a bit previous to fret about the money market funds which I don't buy anyhoo.
I have trivial monthly balances between buys in my S&S ISA and don't think Halifax pay me interest on the small balances anyhow.
For me short term gilts are better unsheltered for the capital gains allowance and I do my asset allocations between various sheltered and unsheltered accounts, annuities and physical gold. Growthy equities are best in the ISA as they can become a tax liability in a SIPP when withdrawing.
Restricting cash limits to £12k nah I don't keep cash ISAs. I'm not one to move to low return low risk approaching accessing the pension, I could be 30+ years retired

Thanks for the details, looks inconsequential to my style but you've been hampered

Firegirl

Happy New Year to you all!🎉

@michaels I love a thread hijack! Always learn a lot from a tangent.  I’m def going to put some thought into putting more to an ISA rather than Pension.  I don’t think I’ll need to use unwrapped products at the moment.  I haven’t thought about calcs yet but on a surface level the lazy side of me is thinking to continue with high pension contributions for the next few years until the rule changes take place or maybe until my pension reach’s a certain amount.  Not sure what my approach will be yet but I’m also considering the rule of 72 because I’m 10 years from the age I could draw down from pension.  Actually I’ve no idea how I’m going to work this out or calculate it, but that’s on my to do list so any ideas please share. 😀. Initial thoughts maybe once my pensions get to £500,000 to continue company matching amount but pivot to saving to my ISA after tax, but need to do some calcs.

To kick start the New Year and stay focused on my goals I had a look at my work pension.  I’ve been a perm employee since Jan, so this is for a full year.  Although there was a low contribution in Jan until I got salary sacrifice set up.

Figures are rounded:

Salary Sacrifice £24,800

Employer core contributions £5,900

Employer match contributions £4,000

Total £34,600

Current Value £38,000

I very happy with this to say the least!  In short I’ve have approx 10k contributions from my company and I haven’t paid the high tax rate on my contributions.  When April comes I will look at the calcs for the year and adjust my percentage salary sacrifice if I need to. 

Wishing you all a lovely new year and keep reaching for your goals in 2026.❤️

NormalNorman

Amazing reading.

The main wfh job has me in HRT but always mitigated with high salary sacrifice contributions. Unsure how secure this job is for the long term so also got a local evening job with the council into which I pay towards the DB scheme for the hell of it. 

Part of me would like to reduce pension contributions and live a little more but feel like I can’t as I would be hammered by tax. I engineer my take home pay to be right on the cusp of 20% allowance. 

Currently funding daughter through uni too so life’s expensive. 

Anyway, having two jobs makes me feel like I’m self employed, lol!

Firegirl

Thanks @NormalNorman

It’s hard to reduce pension contributions when you know the tax will be so high. I’m same as you because there’s often short notice  redundancies, restructures etc it makes me feel like I should fill up my pension as much as possible for the next few years. 

Wow 2 jobs! That must keep you very busy! Life is short though so if there is specific things you want to do, pay the tax and don’t put it off. Love your mindset that your self employed with your 2 jobs😀

I have 1 child who will likely go into apprenticeship or work after school and won’t go to Uni and the other is planning living at home and hoping to go into 2nd year of a course next year, and he has a PT job.  I want to help them on the property ladder but I don’t want to help them with holidays and partying 😆. Helps also that we’re in Scotland so no Uni fees here for my son.

MEL1981

NormalNorman said:

Amazing reading.

The main wfh job has me in HRT but always mitigated with high salary sacrifice contributions. Unsure how secure this job is for the long term so also got a local evening job with the council into which I pay towards the DB scheme for the hell of it. 

Part of me would like to reduce pension contributions and live a little more but feel like I can’t as I would be hammered by tax. I engineer my take home pay to be right on the cusp of 20% allowance. 

Currently funding daughter through uni too so life’s expensive. 

Anyway, having two jobs makes me feel like I’m self employed, lol!

Me too....! In an industry that is known for some wild boom and busts. I also max out my pension contributions every year up to £60k to get my income less for tax purposes, but at the point where the pension is going to exceed what I likely need (£840k pension at present and 44).

I just can't swallow reducing pension contributions then getting hammered with the 60% equivalent tax, yikes. I'm in Scotland too like @Firegirl so get hit even worse for tax. 

Good luck with the two jobs! A grafter indeed! 

Mel

Firegirl

@MEL1981 major well done for saving such a huge pot by 44! Fantastic!

I bring my salary down to below £43,663 so I don’t pay the higher rate tax.  I think it’s worth thinking about fiscal drag and what that would mean for a large pension pot.  When we draw down etc.  But for you, def don’t want to loose your personal allowance.

Both of us have 10+ years until we can draw down and the pot we have might double the value by then if we’re lucky. 🤔 If we have to draw down an amount that brings us into 42% tax bracket, then we’d be better paying the 42% tax now and having it in an ISA?

On another note, Wonder what the markets will think of Trumps weekend events, on Monday, that will be interesting.

NormalNorman

Big congrats on both your achievements @Firegirl & @MEL1981 !

I hear a lot about apprenticeship's which even daughter is talking about, as well as other avenues, after uni. Best wishes to your kids choices.

We have healthy cash balances in ISAs but haven't really in invested through ISAs. Probably because of the tax/NI relief/employer conts/drop a tax band has a much bigger immediate pay off. Wife also sal sac's to the max. Our cash also doubles as emergency funds or big purchases like a new to us two year old car a few months ago which cost £15k. Savings will soon be back where they were.

The thing I like about my zero hour evening job with the council is DB scheme access, a better hourly rate over the same permanent role, no NI to pay and holiday pay added monthly. Also provides access to a whole host of other PT jobs I might fancy changing to in a few years. Or even access to another FT job if the current FT role ends and need something else toot sweet.

On another note we were chucking out ancient DC pension statements etc and came across one from pre auto enrolment. The employer contribution rate was 12%, not the usual 5% these days. Similar for other roles. So it's not just fiscal drag, it's employer drag too, lol!

PS Scotland too. The land of unsurfaced roads never mind white lines, no not that kind, lol!

MallyGirl

A friend's daughter is doing a Bright Start apprenticeship with Deloitte. She is loving it and already has several graduates working for her and she's not yet 21. The salary is pretty good too!

Firegirl

Thanks @NormalNorman. I’m really happy with progress and never dreamt I could ever be in this position.

its good to have emergency fund that you can easily access. I used to volunteer at Citizens Advice and it amazed me how quick people’s circumstances could change.  Although money doesnt fix anything at all, having an emergency fund buys time to pause to sort things out.

Your council job sounds like a great mix of extra funds and a backup plan if your FT job ended for any reason or you fancied a change of scenery.

Yes I did wonder would employers still contribute as much to Pensions given the rule changes but I guess time will tell. 

@MallyGirl I really hope my son can get an apprenticeship as that’s what he wants. He’s a lot of confidence and is the most motivated and determined person I know  (Other than my husband who he takes after😆). I know once he gets out in the world he’ll be amazing and it’s just getting that first step. If anyone knows of construction apprenticeships/Brick Laying apprenticeships in Edinburgh/Midlothian let me know!  How mad would it be if I got a pointer for him on this forum😆