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Worried about the future....

54 replies

NoddyfromToytown · 21/03/2024 15:25

Ok I'll preface this by saying I have A LOT of debt. It's manageable but it's massive - a lot of it is my own fault due to a spending addiction (reasons were there) but some due to a relationship breakdown and issues with renovating my home. Not to mention the cost of living now that I'm supporting a family-sized home as a single person (no kids and moving is not an option I'd consider).

Managed to sort things out a little by shifting stuff round and currently I should have around £750 a month left after all food, bills, etc. I do admit that I like nice things, nice holidays, etc. and am accustomed to my lifestyle so trying to cut back on those is HARD despite however much I try.

BUT... I don't have a pension. I'm NHS as well and I could cry that I've thrown so many years away. I wasn't as worried as I might be at first given that I own my own home and will have a small inheritance in later life, but with that extra cash available I thought now is the time to get back into it (I'm 39, not planning on retiring until at least late 60s and have good career progression expectations).

I checked and my pension contributions are £446 a month! At first I thought, ok then, still £300 a month spare... but my mortgage is due for renewal shortly and I expect the payments will eat that up given the higher interest rates! Leaving me with literally zero money for emergencies, Christmas, birthdays, etc.

I just wish the NHS would allow us to set our own pension contributions! So what do I do? Just try and save as much as possible? Overpay my loans/mortgage? Get a sugar daddy? Join OnlyFans? 😂

HELP!

OP posts:
owlsinthedaylight · 21/03/2024 22:34

I would never normally suggest this, but can you consolidate your debt into your mortgage to let you make the pension contribution? Particularly if your debt is high interest. Then you could overpay the mortgage if you find you have money left after you have budgeted more.

Bjorkdidit · 22/03/2024 06:02

OP, if you don't pay into a pension, what's your plan for money if you get to the stage where you can't or don't want to work? You say you expect a small inheritance, but the way you spend money, it probably won't touch the sides. Or would downsizing and moving to a cheaper area in 20/30+ years time when you've enjoyed your current home be an option? Have you ever paid into the pension? I was under the impression you had to actively refuse, or else you were automatically enrolled?

But if you started paying into a pension now, you could get in nearly 30 years of contributions by the time you get to state retirement age, which will buy you a very decent pension, given what you have said about working in the NHS at a senior level. Plus, with your income, if you don't pay into the pension, the money you take home will be taxed at 40% (or more if you're in Scotland, plus NI contributions and possibly student loans too, so you'll only see about half of it anyway). Do a take home pay calculation somewhere like listentotaxman.com with and without the pension contribution to check.

So if you don't pay into the pension and don't manage to curb your lifestyle, what are the alternatives? Applying for promotions is good, but the salary jump isn't always that high, especially due to tax deductions. Can you do overtime/bank work - added advantage of you having less time available to spend money.

How long do the loans have to run? Will you be able to live your desired lifestyle on your income without getting into more debt then? Have you finished spending on your home or will you end up wanting to replace things? Are you planning any other big purchases that might mean more debt, like a newer car? Do you have anything you could sell?

Like a PP says, if the loans are high interest, including them when you remortgage might be an option BUT (and it's a big but), extending them over a mortgage length term could cost more, even if the interest rate is lower. Also, you would need to qualify for a larger mortgage (LTV, which if it pushes you into a higher bracket, could make your entire mortgage cost a lot more, also income multiples and affordability) and you must regard it as very much a one off option otherwise you'll probably end up with a larger mortgage and more debt in the future and at some point will spiral into real debt problems.

Then normally a person with debt problems would be looking to enter a formal solution if they can't manage the payments themselves, but they'd be expected to work to a budget, which would be considered quite generous to someone used to scrimping and saving, but you would obviously find very limiting.

OP this is down to you. You're fortunate that you have a decent income and can probably afford a very comfortable life, but your expectations are beyond even this and if you're not willing/able to compromise a little now by starting your pension, you'll be forced into doing so far far more if you can't work when you're much older.

NoddyfromToytown · 22/03/2024 06:37

I can’t believe people are still suggesting a lodger - surely there’s someone you can share with - how difficult do you think having autism is trying to navigate social situations outside of the home?! Never mind in my safe space!

@owlsinthedaylight yes that’s my plan about the mortgage and hoping it will free up enough to pay into the pension.

@Bjorkdidit thank you for such detailed advice. The house was bought very much as a family home, it needed work doing to it which became much more expensive than anticipated but literally everything is completely new and finished now including the boiler even so there will be no costs for that. My plan now when I retire is to downsize to a little flat - either sell this house and use the money to rent or buy it. I guess a lot is dependent on what happens next - I’d love to meet a partner but there’ll definitely be no kids.

I’ve just got a new car which was covered by an insurance payout so not likely to need another for a very long time. I do try and sell as much on vinted etc as I can and now I’m more committed to it things are selling (I’ve made £11 yesterday 🙂). Unfortunately my job is non clinical so no bank shifts and overtime is unpaid.

I think I just panicked really. My loans have a long period to run (6 and 10 years) but I will get an £8k pay rise in 2.5 years in this role, or sooner if I can get a higher grade. I 100% can pay into the pension from then on, so would have at least 25 years contributions which I guess at my salary would be ok.

OP posts:
hellohellohell · 22/03/2024 07:15

I think it would really help if you could provide a breakdown of your costs and loans amounts/interest rates/repayments. Then people might be able to make better suggestions.

Bjorkdidit · 22/03/2024 07:25

I think I just panicked really. My loans have a long period to run (6 and 10 years) but I will get an £8k pay rise in 2.5 years in this role, or sooner if I can get a higher grade. I 100% can pay into the pension from then on, so would have at least 25 years contributions which I guess at my salary would be ok

Great, so things aren't too bad Smile

Sounds more like a case of hanging on in there and keep trying to refinance the loans to cheaper rates so they cost less to pay off. Plus start paying into your pension in 2.5 years time or possibly even sooner.

MissLucyEyelesbarrow · 22/03/2024 07:40

You're only focusing on the employee pension contributions, OP. By opting out of the pension scheme, you are choosing to be under-paid.

If you're 2.5k from the top of Band 8a, you're presumably on about 55k. Except you're not. You're really paid £68k, because the NHS would be paying an additional 23.7% (from April) into your pension, if you were in the scheme.

By not being in the scheme, you are turning down £13k in salary every year.

NoddyfromToytown · 22/03/2024 08:11

MissLucyEyelesbarrow · 22/03/2024 07:40

You're only focusing on the employee pension contributions, OP. By opting out of the pension scheme, you are choosing to be under-paid.

If you're 2.5k from the top of Band 8a, you're presumably on about 55k. Except you're not. You're really paid £68k, because the NHS would be paying an additional 23.7% (from April) into your pension, if you were in the scheme.

By not being in the scheme, you are turning down £13k in salary every year.

I’m 2.5 years away from the top of an 8a, not £2.5k. Because of the slight increase from top of a 7 it’s pushed me into the next pension bracket and tax bracket (only very slightly but the pension contribution is a bit of a jump). I could have afforded the B7 contribution! The bands now are ridiculous, I don’t understand why I can’t get an increment every year instead of waiting…

OP posts:
HagBitch · 22/03/2024 08:23

Yes, the move from top of Band 7 to 8a is a bit thankless for 5 years.

I would do everything within my power to be contributing to the NHS pension scheme though.

MissLucyEyelesbarrow · 22/03/2024 08:42

NoddyfromToytown · 22/03/2024 08:11

I’m 2.5 years away from the top of an 8a, not £2.5k. Because of the slight increase from top of a 7 it’s pushed me into the next pension bracket and tax bracket (only very slightly but the pension contribution is a bit of a jump). I could have afforded the B7 contribution! The bands now are ridiculous, I don’t understand why I can’t get an increment every year instead of waiting…

You're evading the core point, though. Whatever your salary, you are earning 23.7% less, if you opt out of the pension scheme.

Motnight · 22/03/2024 09:08

NoddyfromToytown · 22/03/2024 08:11

I’m 2.5 years away from the top of an 8a, not £2.5k. Because of the slight increase from top of a 7 it’s pushed me into the next pension bracket and tax bracket (only very slightly but the pension contribution is a bit of a jump). I could have afforded the B7 contribution! The bands now are ridiculous, I don’t understand why I can’t get an increment every year instead of waiting…

I understand about the increment issues, Op. I went from top of band 8a to bottom of band 8b. I think that I got about £30 a month extra in my pay packet.

But you need to keep your eyes on the long game here. Which I don't think that you are.

TheDefiant · 22/03/2024 09:45

You get HOW MUCH as an employer contribution????

Please, please, please don't opt out of the pension scheme.

That would be a massive mistake. Especially when you have options. No options you like, but you do have them.

I work in an area related to the gender (should be sex) pay gap and now data is filtering through about the gender (again should be sex) pension gap.

I get a 6% employer contribution and consider myself lucky.

Find savings and/or make sacrifices elsewhere. Don't opt out of the scheme. That is so shortsighted.

Motnight · 22/03/2024 10:12

TheDefiant · 22/03/2024 09:45

You get HOW MUCH as an employer contribution????

Please, please, please don't opt out of the pension scheme.

That would be a massive mistake. Especially when you have options. No options you like, but you do have them.

I work in an area related to the gender (should be sex) pay gap and now data is filtering through about the gender (again should be sex) pension gap.

I get a 6% employer contribution and consider myself lucky.

Find savings and/or make sacrifices elsewhere. Don't opt out of the scheme. That is so shortsighted.

Op has opted out of the pension scheme already.

Notimefortea · 24/03/2024 08:49

Money gurus will recommend that you clear your debt (other than mortgage) before you contribute to investments and pensions. How much is your debt? Could you clear them within a few years if you were really careful with money? If you could do that then you'd hopefully have enough free money to then rejoin the NHS pension.

silentpool · 24/03/2024 09:13

Not sure how this equates to the NHS pension, but if you start a pension late, you have to contribute the equivalent of half your age in % terms to catch up. I absolutely would not wait if I were you.

The other factor to consider is that you may not want or be able to work full time when you are in your 50's/60's so this chance to contribute full time contributions will have slipped away.

I'm just about 50 and looking to drop down a day because I can't cope.

MissLucyEyelesbarrow · 24/03/2024 09:19

Notimefortea · 24/03/2024 08:49

Money gurus will recommend that you clear your debt (other than mortgage) before you contribute to investments and pensions. How much is your debt? Could you clear them within a few years if you were really careful with money? If you could do that then you'd hopefully have enough free money to then rejoin the NHS pension.

Not if your pension scheme has a 24% employer contribution! And as long as you're not at risk of insolvency/bad debt.

Twizzletoe · 24/03/2024 09:48

The NHS pension scheme is one of the very best defined benefit schemes available even with the move to the CARE 2015/22 scheme. You have said that you are very worried about the future but also seem to be saying no to any and all suggestions to try and change things.
As your renovations are completed and you have replaced your car then now seems to be an ideal time to look in detail at your outgoings and think about where you might be able to cut back some in order to afford the contributions. Ultimately you can either spend less or earn more in order to make up for the drop in take home that the pension contributions would produce. As you have mentioned a second job in the summer months do you have the time to find a second job for some of the rest of the year? As you are non clinical I presume your hours are office type ie 9-5 Mon -Fri so maybe casual work in evenings or weekends. You could opt out of the second employers pension scheme but maybe offset the effect of the pension scheme contribution from your NHS income.
It is always difficult to balance future security with enjoyment now. I certainly wish I’d been on more holidays when the kids were smaller but made limited choices based on husband’s poor mental health at the time. However we still enjoyed the trips we did and now they are much older we can do much more adventurous trips. A long winded way of saying you can’t change the choices you made in the past but you can make different choices as time passes!

westisbest1982 · 24/03/2024 10:03

MissLucyEyelesbarrow · 24/03/2024 09:19

Not if your pension scheme has a 24% employer contribution! And as long as you're not at risk of insolvency/bad debt.

So what do you propose OP does with her debt repayments, if she opts back in soon? The debt won’t go away, and is a huge amount.

NorthernDuck · 24/03/2024 10:07

@NoddyfromToytown I’m not sure your calculations are correct, my DH is an 8b and his pension is currently 11.7% but decreasing to 10.7% with the rule changes, the contribution for him will be about your estimates so yours will be lower.

my back of the fag pocket calculations:

band 8a salary - £50,952
contribution rate - 10.7%

50,972 x 10.7% = 5,454 (gross)
net contribution £4,545 (5454 / 1.2)
Monthly amount £378
guaranteed retirement amount 1/54 x 50,952 = 943.

Personally I would opt back in asap and when you get the top of the band increment I’d be making additional voluntary contributions to make up for the lost years (using at least 50% of this payrise). You won’t be used to the extra income so best to save it before you spend it. Fingers crossed they don’t take as long deciding on the pay increase this year and you will benefit from that.

A few of DH colleagues opted out, they have all been there 10 years plus and whilst DH has a guaranteed pension of about £10k a year from the payment over the last 10 years, they have enjoyed the extra £300-400 a month salary. Personally I thought they were crazy opting out and they are massively regretting it now they have all hit 45+.
DH gets top of the 8b band this summer and we are going to use the increment to pay into a private pension as the nhs 2015 scheme you lose 5% of the annual payment for each year you take it “early” ie before state pension age of 68. So if you retire at 60 you’d lose 40% of the monthly payment. Whilst it is a huge pension it’s not as flexible.

Bjorkdidit · 24/03/2024 10:13

@NorthernDuck do you know if the pension percentage is on the whole salary, or just the amount above a threshold?

Surely it can't be the former, as someone on (made up numbers) of £55k paying 10% into their pension will take home less than someone on £54k who pays in 8%.

I'm in the civil service pension and it's a similar scheme, but I can't work out from the wording how it works and I'm just below a threshold where the percentage contribution increases.

mintbiscuit · 24/03/2024 10:21

Well OP you’ve rejected all other suggestions so sugar daddy or Only Fans it is!!

NoddyfromToytown · 24/03/2024 11:33

No it’s on the whole salary

OP posts:
NoddyfromToytown · 24/03/2024 11:34

mintbiscuit · 24/03/2024 10:21

Well OP you’ve rejected all other suggestions so sugar daddy or Only Fans it is!!

Well I was only half joking 🤷‍♀️

OP posts:
RosesAndHellebores · 24/03/2024 11:45

It's pretty simple op. The pension is a non negotiable in my book. If you want to keep the house, you cut every other expenditure to the bone. If you can't do that you need to sell the house and buy yourself a one bed flat. That will become your safe space.

It sounds as though you have had a lot of jam today and it's time to pay the piper.

westisbest1982 · 24/03/2024 12:00

Once again, OP has a lot of debt. Reading between the lines, the debt is at least a five figure sum, an amount that she has to pay off, with no help from anyone.

So, no, it isn’t the no brainer decision some are saying it is.

Notimefortea · 24/03/2024 14:04

MissLucyEyelesbarrow · 24/03/2024 09:19

Not if your pension scheme has a 24% employer contribution! And as long as you're not at risk of insolvency/bad debt.

Ordinarily I would recommend to everyone that they pay into a pension. However, OP cannot afford the NHS contributions, and the NHS won't permit reduced contributions to remain in the scheme. Her debt is the reason she can't pay the contributions so she needs to get rid of the debt.

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