Am I in a terrible financial position? How can I improve?

[pinkypank]

I'm panicking that I've messed up with my pension situation and am posting to see if my/our financial position is bad or ok. I don't have parents to ask for guidance on this and I'm generally not good with numbers or finances in general.

Disclaimer that obviously I realise there are people much worse off than me.

I am 28, live with DP, getting married in 8 weeks time. No DC.

We both earn the same salary of £37,500

Mortgage of £219,000 with £74,000 equity.

Own 2 cars outright, worth about £20,000 combined, but no other notable assets.

I have £100,000 of debt with student finance England, it's currently increasing because of interest not reducing.

We have no other debt.

I am panicking because I have under £3,000 in my pension because I've been at university for 6 years and I know I have time to pay in but I feel so far behind I know I should have a lot more than this is my pension. What can I do?

Neither me or DP will get any inheritances or money gifted in the future.

Any thoughts on my financial situation or how I can make improvements? Am I doing badly? I'm overwhelmed with anxiety about the pension thing.

Thank you

Also it's an NHS pension if this makes a difference?

Well if you remain working for the NHS for the next 40 years you'll be fine - your pension will be half the average salary you earned over that 40 years. Plus a state pension of £10k a year.

You're 28

Plenty time

Please don't worry about something that's 35/30 years away. Get some financial advice and actions in place. Hope you have a great wedding 🥰

I'm not sure how the NHS pension works but if it's like the civil service one the £3000 isn't a 'pot' like standard pensions but is the amount you'll get a year, and it goes up quite quickly due to the compound interest once you've been working a few years.

You'll probably be working at least another 35-40 years, plenty of time to pay in. Lots of people your age won't have a pension OR a house so you're doing fine. Presumably if you were in uni for 6 years you're a doctor or similar so the £37k will increase pretty rapidly?

When I started to read your post I thought you were going to say you were 15 years older and panicking. It’s great that you’re aware of how important a pension is but you have so long to pay in, and if you start properly now it will build, as will your salary. I don’t know how a NHS pension works but private company contributions can be as low as 3% and they will put in way more than that. Enjoy your late 20’s, and your wedding!

If you stick with the NHS you will be fine. The very generous pension scheme is one of the reasons the NHS has no money.

Do you really have 100,000 debt of student finance?

NHS pensions are (for now) really good. As and when you have any spare money later in life, you can make up contributions by overpaying, so don’t worry.

Student debt is a pain in the neck. But again, as salary goes up it becomes less problematic and if it doesn’t , you won’t pay it all back.

Two salaries of £37k put you well ahead of the majority of UK households.

The only people I know with £100k student debt are doctors. This aligns with your salary which is the same as a newly graduated
junior doctor!

Nonsense!

NHS staff make their own contributions every month to a dedicated scheme.

Employees do contribute yet it’s a defined benefit scheme

These also require large contributions on the employer side (NHS)

These are higher than employer contributions you find in the private sector, and typically why very few (if any) private orgs would run this kind of pension scheme given the expense

Thanks for the advice and reassurance! I feel a lot better reading the responses.

@another1bitestheduck @Chestnutworld no I'm not a doctor!

@slipperypenguin £112,000 I just logged in. It just keeps going up and up it's so depressing.

Then how on earth do you have £112k debt, what did you study for 6 years? A standard degree if 3 years, masters now all 1 year courses so 4 years total?

the student debt if it’s from the government finance scheme is just a tax on income and I wouldn’t worry about it. If it’s a separate masters type loan (available circa 2007-2010, not sure what its like now but the government only gave cheap student loans on undergrad courses back then) then I’d be making sure I was paying that back asap!

She's a doctor, 6 years with an extra BSc. The interest starts from day one of the first year. Tuition and maintenance loans each year for 6 years plus interest.

I know the debt feels impossible. But try to live your life. You have loads of time to accrue and save for your pension. Have a lovely wedding!

That's the old 1995 pension scheme. The accrual rate used to be 1/80th salary per year so 40 years work got you half your final salary. The new system is different. Still good, but not a simple half.

And the compound interest mentioned by a PP doesn't apply to this type of scheme.

OP, you will be in the 2015 NHS pension. This adds 1/54 of your salary to your pension each year. And as mentioned it's not a 'pot' in the same way as a defined contribution pension - so all the media articles you may read saying you need a pension of £500,000 or whatever aren't relevant to you. What you see on your TRS is the amount you will get every year (not including future contributions, and assuming you retire at standard pension age).

Investigate whether your trust offers pension webinars (they may be called something like preparing for retirement, but you don't have to be close to retirement to do them - the sooner you understand how it works the better).

No debt apart from student loan and mortgage is a very good start. The next thing to work on would be building up an emergency fund of savings, but don't panic - you're doing OK, and things will get easier as you progress in your career.

Just checked - it's way better than the 1/80 salary accrued per year I assumed - it's 1/54th! https://faq.nhsbsa.nhs.uk/knowledgebase/article/KA-29075/en-us

@NoBinturongsHereMate thank you so much for the info, that's really helpful!

@MBL I'm not a doctor! I will probably stay at a band 6 for the rest of my career. Potential of a 7 in the future but who knows.

@Chestnutworld because I was pushed into going to uni at 18 when I had no idea what I wanted to do and had no guidance or support to fall back on and was trapped. I then had to go back at aged 24 to retrain for my current career.

I've actually done 7 years at uni but was trying to be vague in my OP. 2 undergrad degrees which accounts for the debt and a year postgrad which was funded by my Trust.

There is no need for you to be panicking or overwhelmed with anxiety. That's a very extreme response to something that is decades away. By all means put plans in place to further your career and perhaps make extra contributions, but honestly it's concerning that you feel so overwhelmed by this at age 28 and weeks away from getting married. You are at the most exciting part of life - don't let what might happen forty years from now get in the way of the adventure.

If she had had full maintenance loan plus tuition fees it's around £21k a year, so £100k would be on the lower side.

My daughter is a NHS worker, at the moment it is a gold plated pension. As I have told her, the only issue (at present) is when you can access it. Actuarial reduction for taking it early may be an issue and given that state pension age may rise to 70+ I have advised her to take out a private pension (in addition, SIPP) to bridge her desired retirement age and the optimal age for taking NHS pension.
NHS workers❤

Oh, as regards the student debt, she is 75k in. It is what is keeps rising but even though she is relatively well paid (Pharmacist) it will never get paid off.
The rules for the interest rate on student loans is a National scandal and we should be up in arms, but that is another thread.

I'm a nurse. I'd say a good 1/3rd of my class had done 6 years of uni, as we had already done an undergrad and decided to do nursing as it had a defined career path, stable job for life etc.

Plua she's on 37.5k, she sounds like she's on agenda for change.

Hmmmm

"The interest rate for pre-2012 loans is linked to the Bank of England base rate. The interest rate for Plan 1 loans was 6.25% at the start of the 2023/24 academic year, but fell to 6.0% from 30 August 2024"

Why so much more than the base rate?
It is absolutely, can't think of a better word, EVIL.

We should be doing more than my keyboard warrioring

Well of course they do that's how pensions work but the NHS also pays in a very generous amount (more than you would get in the private sector).