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

AlanP_2

jimjames said:

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

They could use AA carry forward then and not be limited to £60k and don't forget the AA uses Pension Input Amount for DB schemes and not amount contributed.

marysmarket

Thanks for all the replies. 

I appreciate I'm in a good position but do feel like my lack of financial planning prior to now plus my personal circumstances are leaving me vulnerable...

I will look at NHS pension which is very confusing. It doesn't allow top ups per se is my understanding. 

I have read up on SIPPs and possibly looking into transferring some of my cash ISA savings into S&S ISA, but then I am getting worried about the market crashing and leaving me with less than I put in. It's a basic worry, how do I get over this?

Previously I've only invested in bricks and mortar. I know the BTL dream is now over and my tax bracket is no longer suitable for this. Am I better off ploughing £100k into moving home and investing my money into my own home ?

Any other advice most welcome. I feel the monthd go by and my biscuit tin remains under the mattress.

Albermarle

I have read up on SIPPs and possibly looking into transferring some of my cash ISA savings into S&S ISA, but then I am getting worried about the market crashing and leaving me with less than I put in. It's a basic worry, how do I get over this?

This scenario is always possible. If you want returns higher than cash savings then inevitably there has to be some risk involve.
Any investment in the financial markets can go down as well as up.
However by sticking to simple mainstream regulated investments, the risk is reduced and the long term trend has always been up.
So the key is to ignore short or even medium term movements and think long term ( > 10 years ideally)

Alexland

marysmarket said:

I have read up on SIPPs and possibly looking into transferring some of my cash ISA savings into S&S ISA, but then I am getting worried about the market crashing and leaving me with less than I put in. It's a basic worry, how do I get over this?

The trick is to invest in assets that are suitable for the amount of risk you are prepared to accept and take a long term view.

The fluctuating daily valuations you see along the journey don't matter. All that matters is the prices you buy and eventually sell at. Other assets like houses go up and down in value every day but you don't notice because all you know is that if you hold it long enough you will be likely to sell for more than you paid. Every so often you see what a similar house nearby sells for or look at a property website valuation you know is inaccurate anyway. Just imagine how jittery you might be if there was somewhere you could accurately see your house price changing every second.

If you are regularly investing a crash is good because you can buy more S&S units at lower prices. Even the existing S&S investments you have made are reinvesting the dividends at lower prices. Crashes actually help investment returns during the accumulation phase. During the decumulation phase there are strategies to avoid them causing long term damage.

You don't have to put all your money into the stock market or pick your own shares it's OK to buy a broad index tracker and allocate some into fixed income assets to reduce the volatility of the portfolio. There are low cost multi asset funds that do this aimed at different levels of risk/reward you might consider.

Sarahspangles

AlanP_2 said:

jimjames said:

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

They could use AA carry forward then and not be limited to £60k and don't forget the AA uses Pension Input Amount for DB schemes and not amount contributed.

I have been contributing as much as I can to a SIPP, alongside my NHS pension contributions, for a couple of years. The PIA on a management salary is significant, and I’ve needed to carry forward Annual Allowance to cover my contributions. I'm about to retire, but I ran the figures for next year out of interest, and I could only max out my contributions for one final year before the AA would significantly curb contributions.

marysmarket

Sarahspangles said:

AlanP_2 said:

jimjames said:

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

They could use AA carry forward then and not be limited to £60k and don't forget the AA uses Pension Input Amount for DB schemes and not amount contributed.

I have been contributing as much as I can to a SIPP, alongside my NHS pension contributions, for a couple of years. The PIA on a management salary is significant, and I’ve needed to carry forward Annual Allowance to cover my contributions. I'm about to retire, but I ran the figures for next year out of interest, and I could only max out my contributions for one final year before the AA would significantly curb contributions.

Please tell me more about how you have managed this alongside your NHS pension? ... in words of one syllable please as I really do not speak Finance🙏

Anyone have suggestions for a good SIPP provider? I am looking at Hargreaves Lansdown.

Alexland

marysmarket said:

Anyone have suggestions for a good SIPP provider? I am looking at Hargreaves Lansdown.

Assuming this is a new account you want to make regular contributions into then you are usually better with a provider that charges no or low percentage fees with no trade costs and once the account gets big enough (after enough years of contribution and growth) then moving it to a provider that has capped or fixed fees maybe with trade costs which could still work out cheaper than a low percentage on a large amount.

HL are expensive at 0.45% pa fees which might not sound like much but the effect of these fee deductions over enough years is wealth damaging. For comparison Dodl (the simple app version of AJ Bell who are an established FTSE250 company kinda the Manchester version of HL) only charge only 0.15% with a £1 pm minimum fee. Dodl have a limited choice of investments but seem to offer a good range of low cost global tracker and multi asset funds depending on your risk appetite and what you might want to invest in. You may find you don't need the thousands of investment choices available on HL or the main AJ Bell platform.

Have a good think about what you want to invest in and your appetite for risk.

london21

Can increase your pension contribution as you are a higher rate tax payer. That is what I have done. 

Sarahspangles

marysmarket said:

Sarahspangles said:

AlanP_2 said:

jimjames said:

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

They could use AA carry forward then and not be limited to £60k and don't forget the AA uses Pension Input Amount for DB schemes and not amount contributed.

I have been contributing as much as I can to a SIPP, alongside my NHS pension contributions, for a couple of years. The PIA on a management salary is significant, and I’ve needed to carry forward Annual Allowance to cover my contributions. I'm about to retire, but I ran the figures for next year out of interest, and I could only max out my contributions for one final year before the AA would significantly curb contributions.

Please tell me more about how you have managed this alongside your NHS pension? ... in words of one syllable please as I really do not speak Finance🙏

Anyone have suggestions for a good SIPP provider? I am looking at Hargreaves Lansdown.

I had a personal pension from a previous employer, and I opened a SIPP with that i.e. I transferred it in. But you can open a SIPP with a cash contribution from your bank account. It doesn’t have to be paid out from your pay packet, if you know what I mean. You just need to be sure you have enough relevant UK earnings over the year to cover your NHS contributions plus your SIPP contributions. You then get 20% tax relief added to the SIPP automatically. You need to reclaim any higher rate tax you have paid by writing to HMRC towards the end of the tax year.

There is a separate limit to the relevant UK earnings one, called the Annual Allowance, that you need to stay within. Currently £60k. For that you need to know your PIA (Pension Input Amount) for your NHS contributions. It’s a different larger number than the pension contribution you make from your pay packet. You’re probably ‘safe’ this year because so long as you paid into a pension in the previous three years you will have some Allowance you can carry over. But for subsequent years you can request the PIA figure from NHSBSA.

Once you get your head round it, it’s no more complicated than savings accounts and tax returns.