The Money Thread...

[Grumpy David]

Ah, so 2 of my jobs were with defined benefit schemes, in that case will likely not be worth changing them?

I am going to contact the schemes now, update my details and get the information I need before deciding what to do.

Thank you for your replies

It would be utter madness to transfer a defined benefit scheme to defined contribution. Most schemes actually require you to get an IFA to sign off on switching them because it's such a bad idea as DB is the Gold Standard of pensions.

[Tomous]

Ah, so 2 of my jobs were with defined benefit schemes, in that case will likely not be worth changing them?

I am going to contact the schemes now, update my details and get the information I need before deciding what to do.

Thank you for your replies

It would be utter madness to transfer a defined benefit scheme to defined contribution. Most schemes actually require you to get an IFA to sign off on switching them because it's such a bad idea as DC is the Gold Standard of pensions.

Even if I was only there for a couple of years?

[Grumpy David]

Ah, so 2 of my jobs were with defined benefit schemes, in that case will likely not be worth changing them?

I am going to contact the schemes now, update my details and get the information I need before deciding what to do.

Thank you for your replies

It would be utter madness to transfer a defined benefit scheme to defined contribution. Most schemes actually require you to get an IFA to sign off on switching them because it's such a bad idea as DC is the Gold Standard of pensions.

Even if I was only there for a couple of years?

Most of the DC schemes require professionals to sign off that they've recommended you swap from DB to DC. It's a seriously high risk / compliance issue.

https://www.moneyadviceservice.org.uk/en/articles/transferring-out-of-a-defined-benefit-pension-scheme

At a glance
In most cases you’re likely to be worse off if you transfer out of a defined benefit scheme, even if your employer gives you an incentive to leave.

Before you go ahead, you should seek advice from a regulated financial adviser.

In some cases you might have to.

With only 2 years in a DB scheme its very unlikely to be worth 30k which is generally where the IFA sign off is required but DB schemes are guaranteed inflation linked returns where as DC assumes certain levels of stock market returns.

You might be surprised at how much 2 years of DB pension might equate to on a monthly basis. They're very generous schemes that 2 years of DC wouldn't remotely compare to unless you assume something insanely high like 4 decades of 10% after inflation returns.

Sort the DC out and leave DB the hell alone (but do update your current address and contact details with them).

[Tomous]

Thank you, makes sense

I've contacted each to update my details and will look at merging the DC from my last job into my current scheme.

[Jenuall]

I go through phases of getting really hands on with my pension - tracking funds, moving things around, comparing charges etc. but then I fall back in to just leaving it alone for ages. It seems to be doing okay at the moment but pensions in general always seems like such a huge area that despite how important it all is I almost just want to ignore it and not have to worry about it all!

Looking at it today it's nice to see that it seems to have recovered well from the Covid wobble earlier in the year, that's enough reassurance to keep me happy enough for now!

[Joer]

Anyone have any advice on a savings account to get to help with the below?

I'm aiming to save approx £6,000 a year with £4,000 of that going straight into my Help to Buy ISA to get the 25% benefit there. I'm looking for something where I can withdraw money once a year to move into the ISA to get the 25%, with the rest of the money just gathering interest until it gets moved over/I finally manage to buy a house.

No need for regular withdrawals, just the one a year for the bonus.

Any suggestions?

[That's not a growth]

Do you mean LISA? You can't deposit more than £200 a month into a help to buy ISA.

[poshrule_uk]

Anyone have any advice on a savings account to get to help with the below?

I'm aiming to save approx £6,000 a year with £4,000 of that going straight into my Help to Buy ISA to get the 25% benefit there. I'm looking for something where I can withdraw money once a year to move into the ISA to get the 25%, with the rest of the money just gathering interest until it gets moved over/I finally manage to buy a house.

No need for regular withdrawals, just the one a year for the bonus.

Any suggestions?

This is one of the leading market rates and allows you to top up ans access money twice a year so looks like what you want

https://www.coventrybuildingsociety.co. ... ine-4.html

[Joer]

Do you mean LISA? You can't deposit more than £200 a month into a help to buy ISA.

Looks like I do! I thought I had a Help to Buy ISA but it turns out it's a Lifetime ISA. Have I strawberry floated up there by getting a LISA instead or am I not missing out?

[Joer]

Anyone have any advice on a savings account to get to help with the below?

I'm aiming to save approx £6,000 a year with £4,000 of that going straight into my Help to Buy ISA to get the 25% benefit there. I'm looking for something where I can withdraw money once a year to move into the ISA to get the 25%, with the rest of the money just gathering interest until it gets moved over/I finally manage to buy a house.

No need for regular withdrawals, just the one a year for the bonus.

Any suggestions?

This is one of the leading market rates and allows you to top up ans access money twice a year so looks like what you want

https://www.coventrybuildingsociety.co. ... ine-4.html

Lovely stuff, cheers!

[Grumpy David]

Working from home. Claim tax relief automatically.

https://blog.moneysavingexpert.com/2020/04/martin-lewis--working-from-home-due-to-coronavirus--claim-p6-wk-/

You can now claim for the entire years work at home allowance before the end of the tax year.

I'd been delaying sorting out the £125 Tax Relief for this exact reason.

Edit: once you're logged in you just put in the date you started WFH and it's all done. Super fast.

[Ecno]

Do you mean LISA? You can't deposit more than £200 a month into a help to buy ISA.

Looks like I do! I thought I had a Help to Buy ISA but it turns out it's a Lifetime ISA. Have I strawberry floated up there by getting a LISA instead or am I not missing out?

I have a LISA, which for me was better because,

Can use to buy a higher priced house £450k vs £250k (outside of London)
Can contribute more a year
Got the bonus instantly which means it can be used for a deposit (or at least more easily)

The downside is that if you want the money back because you get charged a 25% withdrawal which is more than the bonus you pay (I don't know if the lads at HMRC messed up the maths on this one or it's on purpose).

I've also just read you've not been able to get a HTB ISA since 2019. Probably because they weren't that well thought through.

[Curls]

Savings accounts are so poo at the moment better off investing it in cigarettes and selling to kids outside of a school.

[Tomous]

Do you mean LISA? You can't deposit more than £200 a month into a help to buy ISA.

Looks like I do! I thought I had a Help to Buy ISA but it turns out it's a Lifetime ISA. Have I strawberry floated up there by getting a LISA instead or am I not missing out?

I have a LISA, which for me was better because,

Can use to buy a higher priced house £450k vs £250k (outside of London)
Can contribute more a year
Got the bonus instantly which means it can be used for a deposit (or at least more easily)

The downside is that if you want the money back because you get charged a 25% withdrawal which is more than the bonus you pay (I don't know if the lads at HMRC messed up the maths on this one or it's on purpose).

I've also just read you've not been able to get a HTB ISA since 2019. Probably because they weren't that well thought through.

They were replaced by the LISA'S, you could open a LISA and transfer your HTB ISA in, something I did.

[Grumpy David]

Savings accounts are so poo at the moment better off investing it in cigarettes and selling to kids outside of a school.

That's certainly one option.

I did the boring thing of moving my cash savings to Premium Bonds and increasing my pension contributions whilst the stock market went to gooseberry fool.

Then the global stock market had an insane recovery in months and NS&I announced Premium Bonds prize fund is decreasing.

[Jenuall]

Leading market rate of 0.96%?

The interest on my current account isn't far off that!

I've gone with the increasing pension contributions approach as well at the moment, at a time when I don't particularly need access to what I'm saving it just seemed to be the best option right now.

[Curls]

I have no idea how to increase my pension contributions..... pensions is the one area of finance i've never really looked at. Just felt like a faff because work are involved. Any tips?

[poshrule_uk]

There are ways to maximise cash interest at the moment, regular savers are one avenue along with bank switching by playing the system

[Tomous]

Working from home. Claim tax relief automatically.

https://blog.moneysavingexpert.com/2020/04/martin-lewis--working-from-home-due-to-coronavirus--claim-p6-wk-/

You can now claim for the entire years work at home allowance before the end of the tax year.

I'd been delaying sorting out the £125 Tax Relief for this exact reason.

Edit: once you're logged in you just put in the date you started WFH and it's all done. Super fast.

Thanks GD, just did this myself. Very impressed by how easy it is to do.

[Grumpy David]

I have no idea how to increase my pension contributions..... pensions is the one area of finance i've never really looked at. Just felt like a faff because work are involved. Any tips?

Do you have a public sector (defined benefit) style pension or private sector (defined contribution) pension?

I'm DC. All I did was tell the HR team that I wanted to do X percentage deduction instead of the auto enrolment minimum of 5%.

If you have Salary Sacrifice as your pension deduction method nothing comes close to matching the tax efficiency of it. You save tax and NI (and defer student loan payments). If I wanted £100, after all deductions I'd have £49 take home. But the full £100 goes into my pension.