Statement of intent

gallygirl

StuartGMC wrote: »

Anyone want to make a call on the above?

Ok, no research done, but Lakshmi Mittal is starting to de-mothball steel works & start producing steel again so I'm a

or at least a

(sorry about size, on poor connection, will try to resize tomorrow )

StuartGMC

GG
I too am siding with the bulls, fingers crossed!

StuartGMC

More news on changes from defined benefit (final salary) schemes to defined contribution schemes on the BBC at http://news.bbc.co.uk/1/hi/business/8217783.stm

Via our staff committee I've sought comment on what would trigger my employer to shut the DB scheme to the existing members; the answer was we have no plans to do so.... hence I am hoping that the markets pick up strongly through 2010 ready for actuarial evaluation in 2011 so the fund is better placed than now. However, this is a strong driver to be generating growth in savings ahead of any change to assist us, then if it happens we'll have to then look at funds on offer and the risk profile etc.

Thinking of funds, my new salary was paid in today so the increase will help towards the decision on the MFD. Basically our total savings and investments in October (assuming investments don't collapse!) would be just comfortable for a short time but, ideally I want the investments to remain in the funds so they will grow not be called upon as cash. So, it is still a fine line against when we will make the full payment to clear, likely to be about £13300 to drop from savings into the mortgage.

Today paid an additional £400 into our savings which means £1211 in during August but we had moved £400 out to current a/c whilst on holiday to cover credit card bill. Even so, that's £1511 into savings and investments this month, plus the £750 into the mortgage which I think is quite a healthy total.

Today we are again more than offset in terms of cash vs mortgage with about 16% extra above the mortgage capital remaining, plus the investments on top so our net position vs mortgage etc is that we're about £10,900 in the black on a net basis overall :j:j:j

Funds are continuing the current run of growth so that we're getting closer to breakeven. In fact from Oct 2008 when we were some 50% down (a loss of more than £4000) we have recovered to only 8.84% loss. In this time we've invested £2400 and the funds have grown by £6500.... hindsight is wonderful, if we'd put in £10k in November as a lump sum just think it would be worth so much more now! However, I rest assured that we stuck to the investments whilst things were bad and many others had pulled out of the markets. All I need now is for a period of steady growth (as if that'll happen!)

RosieTiger

Stuart,
same position as you, following the stories re ending of final salary schemes and whilst the "no plans to do so" answer is better than yes we are I just don't see it surviving. I have had my rant about this before in that the same people who wrecked the economy are the ones who want these schemes ended to ensure they can take higher dividends - someone has to keep them in Ferraris when BoE is threatening curbs on bonuses.
Great to see you are essentially there and I hope the steady growth you would like comes for all of us !

SuiDreams

I'm on a contrubution based pension scheme, the final slary scheme had been closed for a while before I even got a staff possition (9 years ago), I've been paying into for 9 years and its still only worth a few thousand a year, and reduced even further during the recession, hoping it will improve though, but saving as well to cover shortfalls, so hopefully won't be poor in retirement.

chirpchirp

Hi Stuart, I really don't understand pensions at all. I have a very small final contributions pension from before the children were born. I also have a personal pension which I won't be paying anymore into. However, I don't understand the teacher pension scheme as the employer and myself have to contribute to it despite it being a final salary scheme. I wondered if you had come across anything like this or maybe Twinklie or one of the other teachers understands. Hoping someone might be able to clarify this for me.

taka

chirpchirp wrote: »

Hi Stuart, I really don't understand pensions at all. I have a very small final contributions pension from before the children were born. I also have a personal pension which I won't be paying anymore into. However, I don't understand the teacher pension scheme as the employer and myself have to contribute to it despite it being a final salary scheme. I wondered if you had come across anything like this or maybe Twinklie or one of the other teachers understands. Hoping someone might be able to clarify this for me.

I'm not a teacher but I'm in a final salary pension scheme too. I pay 6.35% and my employer (a uni) pays 14% (I think??). I thinks this is quite common though the %s vary scheme to scheme, employer to employer. I imagine your final salary scheme may well be a cost effective way of increasing your pension pot (as your employer also contributes) but it may not be enough on its own if you have been working for a while already (I presume as you have 2 other pensions??). Maybe you should have a chat with an IFA about your different pensions and work out what will be most approprate for your needs?

twinklie

Sorry I can't help I have no clue about pensions and have only been contributing for the last 12 mths. I don't really understand but I know that it's pretty cost effective in terms of it reduces our NI contributions because we have the pension contribution come out first, before NI is calculated and employer contributes.

Thats where my knowledge runs out though. Everyone always says it's one of the best pensions around so I've never bothered looking in to it any further.

StuartGMC

Thanks for the replies - we can but watch and wait.... meanwhile try to see what we can do to improve our personal savings and investments, but personally I intend to also enjoy life along the way.

chirpchirp wrote: »

Hi Stuart, I really don't understand pensions at all. I have a very small final contributions pension from before the children were born. I also have a personal pension which I won't be paying anymore into. However, I don't understand the teacher pension scheme as the employer and myself have to contribute to it despite it being a final salary scheme. I wondered if you had come across anything like this or maybe Twinklie or one of the other teachers understands. Hoping someone might be able to clarify this for me.

Chirpchirp - the two forms of pension are:
1) Defined benefit - i.e you know in advance what you will get. This is the final salary scheme or an "average" salary scheme
2) Defined contribution - i.e. you know how much you are putting in, but, the value is unknown until you convert to a pension as it depends on the stockmarket etc at that date.

Company (employer) pension schemes can be either type, but they usually involve you making a contribution and your employer likewise contributing, matching or multiplying it to a certain limit.

In a personal pension you make a contribution and get government contribution depending on tax level etc.

In my case, I pay in 10% of my gross salary and employer pays in 25% of my gross salary (whilst I don't get any extra pay, it is worth noting most schemes do not include your overtime amounts in the calculation).

As noted by Twinklie, there is a reduction in assessment but I believe the situation is:
NI is calculated on total gross salary
Income tax is calculated on gross salary-pension contribution.

Can anyone confirm this is correct?

I hope that helps?
Stuart

GavB79

Yes, you don't pay income tax on your gross salary before pension deductions - because they tax you at the other end when you start drawing the pension instead.

Edit for example: If your gross is £3,000, and your pension contribution is £300, you are paying income tax on £2,700. Say for argument's sake you draw a £300 a month pension at retirement, you then pay income tax on that £300 then (ignoring personal allowances etc.). If you look at your annual P60, the "taxable pay" for the period is probably less than your annual salary for this reason.