To be gobsmacked about my salary increase

[Clementinemist]

I started a new job a month ago, which came with a £15k payrise. 'Lucky me!' I thought when I was offered the role. It should have meant a bit more more disposable income. But in reality my disposable income has now actually decreased by £150 a month, mostly due to recent rent and bill increases.

Just wow.

I'm well qualified and experienced in my profession, and worked really hard for this role. It's quite senior too with more responsibility than my last job. Yes, I'd have been even worse off financially if I was still in my old job, but still a kick in the teeth. The concept of career and life progression now seems to be dead?

I'm not entirely sure how people have worked out that my take home pay would be £1000 more a month with my increase because that is definitely not the case! Plus I have 9% minimum pension contributions and student loan repayments. And yes, having a pension is good, but doesn't help me put food on the table now. I also suspect most younger people now are not going to benefit from pensions in the same way as pensioners today anyway

i got a 10k payrise and my take home is over £600 more so a 15k payrise is going to be nearing £900?

are you sure they haven’t got your tax code wrong with it being a new tax year/new job?

student loan payments are what they are so no point moaning.

if you don’t think a pension is a good use of your money you can opt out.

even if you were on min wage prior a 15k rise will take you to a decent salary.

it’s all a bit my diamond shoes are too tight. I am more than happy to get my meagre 10k rise, it’s taken me from paying the bills to having a little bit more room at the end of the month.

I'm not entirely sure how people have worked out that my take home pay would be £1000 more a month with my increase because that is definitely not the case! Plus I have 9% minimum pension contributions and student loan repayments. And yes, having a pension is good, but doesn't help me put food on the table now. I also suspect most younger people now are not going to benefit from pensions in the same way as pensioners today anyway

i got a 10k payrise and my take home is over £600 more so a 15k payrise is going to be nearing £900?

are you sure they haven’t got your tax code wrong with it being a new tax year/new job?

student loan payments are what they are so no point moaning.

if you don’t think a pension is a good use of your money you can opt out.

even if you were on min wage prior a 15k rise will take you to a decent salary.

it’s all a bit my diamond shoes are too tight. I am more than happy to get my meagre 10k rise, it’s taken me from paying the bills to having a little bit more room at the end of the month.

@Mia85 Yes it is a risk. I think that for generations above me that having those contributions from decades ago was beneficial but I honestly don't think employer/private pensions are worth it for people my age. In the same way that currently savings accounts lose money due to lower rates than inflation, I think pensions are not the safety net they once were.

Our plan is to use the extra money to buy/improve our property. By not paying into a pension we were able to get on the housing ladder as we had more money for a deposit. We also are £300pm better off buy having a mortgage as opposed to renting. The rising house prices has meant we will have already made back the loss from what our employers would have put in to the pot and the tax loss.

Don't get me wrong, you need a plan for the future, I just think that pensions would be a great bet if you are 60 and have been paying in your whole life but I think my generation will be shafted massively by the time it comes to cash in.

This plan could backfire on us though, I do appreciate that!

@Mia85 Yes it is a risk. I think that for generations above me that having those contributions from decades ago was beneficial but I honestly don't think employer/private pensions are worth it for people my age. In the same way that currently savings accounts lose money due to lower rates than inflation, I think pensions are not the safety net they once were.

Our plan is to use the extra money to buy/improve our property. By not paying into a pension we were able to get on the housing ladder as we had more money for a deposit. We also are £300pm better off buy having a mortgage as opposed to renting. The rising house prices has meant we will have already made back the loss from what our employers would have put in to the pot and the tax loss.

Don't get me wrong, you need a plan for the future, I just think that pensions would be a great bet if you are 60 and have been paying in your whole life but I think my generation will be shafted massively by the time it comes to cash in.

This plan could backfire on us though, I do appreciate that!

@Mia85 Yes it is a risk. I think that for generations above me that having those contributions from decades ago was beneficial but I honestly don't think employer/private pensions are worth it for people my age. In the same way that currently savings accounts lose money due to lower rates than inflation, I think pensions are not the safety net they once were.

Our plan is to use the extra money to buy/improve our property. By not paying into a pension we were able to get on the housing ladder as we had more money for a deposit. We also are £300pm better off buy having a mortgage as opposed to renting. The rising house prices has meant we will have already made back the loss from what our employers would have put in to the pot and the tax loss.

Don't get me wrong, you need a plan for the future, I just think that pensions would be a great bet if you are 60 and have been paying in your whole life but I think my generation will be shafted massively by the time it comes to cash in.

This plan could backfire on us though, I do appreciate that!

Apologies for spamming the thread!

I don’t think you’re being unreasonable. I continually feel disheartened that presently for me there are very few opportunities to progress and if I were successful the increase in pay would be so tiny as to wonder why it would ever be worth it-and that was the case prior to the recent cost of living situation (for context I work in a public sector role).I trained for many years to do this role & often wonder why I bothered when I see others in careers on much higher pay with a better work life balance who didn’t undertake anything like the training slog that I did….but I haven’t walked in their shoes so perhaps it’s an inaccurate comparison.
I would never be in the position of getting a 15k pay rise but well done for doing so & I get how you feel if actually you are now not earning more despite presumably being in a role with greater responsibility.

Get onto your payroll dept and ask for help, that isn't correct. I am in ROI, but our tax systems are v similar. They will be able to point you in the right directly. Something has happened to your tax band/ tax credit (UK equivalent).

Do a quick google of PAYE tax calculator and you will see that you cannot have an increase in wages and take home less money.

I guess you'd have been a lot worse off if you had stayed where you were though. But yes, it is shit.

This is how I feel. We have had a household income increase similar to OP and we are able to save a little more, but with the cost of living increases we don't feel much better off and what we do save soon goes on emergencies anyway. Our lifestyle hasn't changed much. We just feel lucky that thanks to this increase we can weather the storm of these increases, but there's no chance to build a better future with it and get on the property ladder. It's also such a risky time to buy now even if we had the money. I'm glad we aren't on the same pay as before, but it is disheartening that you have worked hard only for it to get eaten up by inflation and the grabby elites (let's face it, they are doing well out if this chaos aren't they?)🤔

I am really angry about the state of things globally. The world economy has been utterly mismanaged and regular people are paying the price for it. Our government are also shockingly complacent about the suffering this is going to inflict on people.

Ffs all these people with a chip on their shoulders because the OP got a pay rise🙈

I certainly understand you're probably feeling disappointed by it. Tried focussing on the fact (not having a go by the way) that it's given you more money than before, so making things a bit more manageable.

We have three jobs between us - the only one giving an annual pay rise is my 7.5 hour pw job, so our extra £16.50 pm has certainly been swallowed up.

Your logic is as daft as hers!!

That's really shit, I'm sorry this has happened to you. The cost of living increases are completely out of control

You're sorry she's got a £15k pay Rise

be serious.

They didn't really learn from the financial crisis of 2008, they carried on doing the same shit but in a different way probably, and this is what we have ended up with. Same old corrupt and immoral ways of operating produce the same results.

I know people talk about the pandemic, but I would ask why the economy was in a shit state prior to that with a bigger deficit than before austerity measures were implemented in 2010, and why we weren't financially prepared for a pandemic in the first place when they are something that is deemed fairly inevitable when you look back through history.

I assumed your net of roughly £840 per month on a £15k annual increase based on being a higher rate tax payer.

There was no further information given in any of your previous posts given about pension deductions or student loan deductions until now, so it's unsurprising that no assumptions would be made about these by PP.

Adding your worse off by £150 a month comment to the £840 above gives approximately £1,000 total not available per month.

If your additional pension and student loan deductions come to £500 per month, it's still pretty steep for your bills to have gone up by £500, though it's possible.

It's good that you have had such a big pay rise meaning you can still manage paying the increases though, and it's not unreasonable to have expected extra money to have been available in your pocket!

It does sound like your pension contributions are quite high, so maybe have a look at reducing those by a couple of per cent for a few months to help manage rising costs.

I'm well qualified and experienced in my profession, and worked really hard for this role.

and yet it would seem did squat all financial planning as to what your take home would actually be with increases in cost and you’re “gob smacked” 😮

Find some cheaper accomodation. Yes, this often means living in 'undesirable' areas, but that is one of your options. Also, me and my husband shopped around for our utility suppliers. There are some good deals out there if you look for them. Sadly the reality of life is that huge numbers of us work our butts off all our lives with very little to show for it in the end. It's wrong. It's unfair. It sucks.......but it's life.

I've reduced the rent on my flats to reflect t the rising costs. I may own a few properties as investments but I don't want to profit from other people becoming poorer.

Even after tax how can that be possible?

I'm guessing it's a sliding scale of pension contributions, as is the case of teaching. So, in teaching, a £35k salary has an 8.6% pension contribution, a £50k salary has a 10.2% contribution. Adding in Plan 1 student loans, that means the take home difference is approx £530 a month. From that, take away an energy bill increase of £200 a month and a rent increase of £100 a month, it's quite easy to see how a £15k salary increase results in a comparatively tiny increase in take home income.

That said, I definitely would NOT support opting out of a public sector pension (or any pension really, but especially not a public sector one). Bonkers.

I'm looking at a promotion opportunity at work, moving from part time to full time and a level up on the pay scale. On paper I'll be getting so much more money every month. In practice I'll be slightly worse off than I'm atm..... I have a few months to decide if it is worth it. It'll take roughly 2-3 years for it to even up.

Humblebrag

In terms of numbers, ignoring any additional pension contributions and student loans that get taken from the increase in salary, I've used a payslip checker to see how much extra £15,000 would generate in net income based on a £15k increase at various starting income levels:

• £0 to £15,000 gives net income of £1,154, so an increase of £1,154
• £10,000 to £25,000 = £833.33 to £1,720.83 net, £887.50 increase
• £25,000 to £40,000 = £1,720.83 to £2,570.83 net, £850.00 increase
• £40,000 to £55,000 = £2,570.83 to £3,380.35 net, £809.52 increase
• £55,000 to £70,000 = £3,380.35 to £4,105.35 net, £725 increase.

The lowest increase in net pay a £15,000 payrise creates is £725 per month, and it's only that low if you're already a 40% tax payer.

OP, if your costs (including student loans and pensions as well as fuel and rent, etc) haven't gone up by at least £725 it's worth checking that your tax code is correct.

If your new job is with a new employer, it's feasible that HMRC haven't got your tax code right and they've taken too much tax from your new payslip.

Have you checked you tax code? Changing jobs can mean a mix up in tax code. Would be worth looking at.

Steamedhams · 26/04/2022 09:13

Honestly, I would be tempted to opt out of the pension, depending on how old you are. My husband and I are late 20s and have stopped these. We plan to use any extra money to invest ourselves in property/green energy etc. Very risky but we think by the time we reach retirement age that a) we will be about 85 and b) the bubble will burst and they won't be worth anything. Instead, we bought our own home and are planning on making improvements to it to up the value and looking at our own retirement plans as there have been plenty of pension scandals in the past. I have older friends who have lost a huge amount of money on pension pots.

And, in case it wasn't obvious, I am in no way a reputable source of financial advice!

Don't worry, it was very obvious. Did your older friends lose money because of bad advice or because of they chose their own investments? Pension scandals tend to be of the owner helping themselves, Maxwell variety rather than insert pension provider goes bust. Pension contributions are made from untaxed income so you're missing out on that, plus when you start in your 20's, you have decades to accrue capital growth and dividends. You'll be missing out on the employer contribution too. Limiting investment to only two sectors - property and green energy is also a mistake as you need to balance risk with a diversified portfolio. I became interested in stocks and shares when I did A Level Economics and actually started investing on my own when I was in my 20's.
My DS and DiL went down the "property as pension" route. Tenants had a faulty dryer that caught fire and destroyed half the house. Insurance refused to pay out because the occupants weren't "professionals" even though it was let to a company promising to house their professional employee.
Me? I now use a firm of independent financial advisors/analysts and I'm satisfied with the returns, plus everything's now wrapped so that my DC can inherit it tax free.