Non existent pension & investments but cash rich...help clueless

marysmarket

I am in a panic as I have realised my total lack of financial planning due to personal circumstances (multiple family issues). 

I have an NHS Pension which is worth pittance as I've only been in the scheme for less than 5 years. No other private pension. I'm mid 40s. No plans for retirement, I never thought this far ahead before. 

However I earn approx £100k and have a healthy pot of cash (£150k stupidly parked in an instant access account and a bank cash ISA). I have made good money in the past by cashing in property investments but feel this was short sighted and I have zero other investments.

I have been through significant trauma due to personal issues and now getting back on my feet, I know I am extremely fortunate to be a higher earner but I am completely clueless. Please help me direct my funds into some sensible options. Right now I am doing the equivalent of the biscuit tin under the mattress.

twopenny

Well it's not all bad. 

You have the money in an ISA and tax free so that can be moved to better ISAs or whatever is best so you'll be getting a better interest than if you'd left it all in the current account.

You're ready to get going.

You may think the NHS pension is a pittance but when it comes to it every little counts. I had an odd enhancement to my oa pension, not much but made a difference.

And lets face it, there was a long period when interest rates were so low you wondered why you bothered.

Now is the time to take advantage of the better rates. You should have a while to get the ball rolling before there's any significent drop in interest rates.

Keep_pedalling

If you are planning on staying in the NHS for the rest of your career that pension won’t be a pittance. On that sort of salary you are paying a lot of tax, so I would suggest rather than saving any more cash you start saving more in pensions, which is far more tax efficient. Ask over on the pensions board about booting your pension. You are also holding far too much cash you should look at getting some of that invested in equities unless you have a big house purchase to make in the short term.

xylophone

https://www.nhsbsa.nhs.uk/member-hub/increasing-your-pension

Dazed_and_C0nfused

marysmarket said:

I am in a panic as I have realised my total lack of financial planning due to personal circumstances (multiple family issues). 

I have an NHS Pension which is worth pittance as I've only been in the scheme for less than 5 years. No other private pension. I'm mid 40s. No plans for retirement, I never thought this far ahead before. 

However I earn approx £100k and have a healthy pot of cash (£150k stupidly parked in an instant access account and a bank cash ISA). I have made good money in the past by cashing in property investments but feel this was short sighted and I have zero other investments.

I have been through significant trauma due to personal issues and now getting back on my feet, I know I am extremely fortunate to be a higher earner but I am completely clueless. Please help me direct my funds into some sensible options. Right now I am doing the equivalent of the biscuit tin under the mattress.

You can expect to add £1,850 to your NHS pension each year you earn £100k and that is revalued for inflation each April.  With a relatively generous CPI +1.5% revaluation rate I think.

So it won't take many years before you start to see a very healthy pension building up.

El_Torro

When do you plan to retire? If it's when your NHS pension starts paying out then you can focus on increasing your pension contributions. Adding to your NHS pension will probably be more beneficial than a private pension, though you will be able to access a private pension before your NHS pension so there is that. 

For your £150k pot of cash you need to decide how much to leave in cash. An emergency fund is usually between 3 and 6 months worth of expenses, so you can probably afford to invest some of this money. Either in a Stocks & Shares ISA or a pension.

If you are earning about £100k a year then it's worth keeping your income below £100k. Above this the tax penalties are steep. If you are going to increase your pension contributions in the coming years this will help keep your taxable income down anyway. 

Eyeful

1. Any money needed within 5 years should be in a Bank/Building Society account
covered by the FSCS up to £85K.Some people use Premium Bonds instead.

2. Use tax shelters where possible 
(a) Pensions: You get free money" from the government & it grows untaxed, at least until you withdraw it.
(b) Cash ISA's or Socks & share ISA's: You will not need to fill in a self assessment tax form.

3. INVESTING means putting your money at risk.
You hope to get more out than you put in, but this this not guaranteed. You may get less.

4. Think of investing in the stock markets as a game.

    Long term (say at least 10 years) its called "investing" odds of winning = HIGH.

    Short term (say few days/weeks) its called "speculating" or "trading" odds of winning = small

5. You can make investing as simple or as complicated as you like.

   The Simple method of investing boils down to this:

(a) Low Cost Global Multi Asset Funds (for Cautious types & those that want more Control)

     A ready made portfolio, where you pick the share/bond split, you are most comfortable with.

Example:  https://www.hsbc.co.uk/investments/products/hsbc-global-strategy-portfolios/#balanced

(b) Using a Target Day Fund:

Example: https://www.vanguardinvestor.co.uk/investing-explained/what-are-target-retirement-funds

6.  Academic research repeatly shows that most "active fund managers" after charges are applied,

    do not beat a MAJOR  GLOBAL WORLD INDEX. 

7. Before investing:

(a) Clear all expensive debt first (except for mortgage)

(b) Have a "Rainy Day" account for emergencies (6 months of house hold bills, is often quoted).

 8. SIMPLE INVESTING IN DETAIL (advantages, easy to understand  & implement).

(a) First watch this: https://www.kroijer.com/

(b) Then read this:  https://monevator.com/passive-fund-of-funds-the-rivals/

     

9. Putting more money into your NHS pension if possible, should be considered. Especially if it is index linked. 

Albermarle

marysmarket said:

I am in a panic as I have realised my total lack of financial planning due to personal circumstances (multiple family issues). 

I have an NHS Pension which is worth pittance as I've only been in the scheme for less than 5 years. No other private pension. I'm mid 40s. No plans for retirement, I never thought this far ahead before. 

However I earn approx £100k and have a healthy pot of cash (£150k stupidly parked in an instant access account and a bank cash ISA). I have made good money in the past by cashing in property investments but feel this was short sighted and I have zero other investments.

I have been through significant trauma due to personal issues and now getting back on my feet, I know I am extremely fortunate to be a higher earner but I am completely clueless. Please help me direct my funds into some sensible options. Right now I am doing the equivalent of the biscuit tin under the mattress.

Sorry to hear about all the family/personal issues.
However I think financially you need a better sense of perspective of your position.
You have £150K in savings, which is way above average. I think something like 40% of the population have no or minimal savings.
5 years in the very generous NHS scheme based on a salary of £100K, already means you have a pension worth more than a lot of people when they retire. By the time you retire your pension situation will be very comfortable by most people's standards.
So of course you need a plan and some good suggestions above, but financially you are not really in a bad position at all from the info supplied.

jimjames

With your high income and substantial savings there is a good opportunity to get a bit chunk of that money into a pension. It will be something called a SIPP (self invested personal pension) that would run alongside the NHS one but give you a different income stream in retirement.

There is a limit of £60k income you can pay in per year to pensions so you'd need to work out what part of that is taken up with your NHS contributions but it does give the option to get some of your £150k into a tax shelter with tax relief added too.

AlanP_2

jimjames said:

With your high income and substantial savings there is a good opportunity to get a bit chunk of that money into a pension. It will be something called a SIPP (self invested personal pension) that would run alongside the NHS one but give you a different income stream in retirement.

There is a limit of £60k income you can pay in per year to pensions so you'd need to work out what part of that is taken up with your NHS contributions but it does give the option to get some of your £150k into a tax shelter with tax relief added too.

Not quite accurate as there are 2 limits - earned income and Annual Allowance (which is the £60k figure quoted).

As the NHS scheme is defined benefit the contributions the OP makes are not relevant for the AA as the Pension Input Amount will be used.

The amount of the OPs contributions will matter when it comes to the test against income.

jimjames

AlanP_2 said:

jimjames said:

With your high income and substantial savings there is a good opportunity to get a bit chunk of that money into a pension. It will be something called a SIPP (self invested personal pension) that would run alongside the NHS one but give you a different income stream in retirement.

There is a limit of £60k income you can pay in per year to pensions so you'd need to work out what part of that is taken up with your NHS contributions but it does give the option to get some of your £150k into a tax shelter with tax relief added too.

Not quite accurate as there are 2 limits - earned income and Annual Allowance (which is the £60k figure quoted).
income.

True but the OP said they earned £100k so they are well above the annual allowance subject to the NHS pension contributions