May 2016 – Update

My monthly update hasn’t been as depressing as some of the recent past. I have broken even with last month and my net worth has remained level overall.

My monthly saving rate is still running at over 60%, just, and although the investments still seem to roller coaster each week, they seem to be less volatile compared to recent months. Looking back to last year I am 6% down comparing May last year with this year. I am pushing money into my pension so that while I am working I can claim as much tax assistance as possible.

I have received my council tax bill and my monthly payments have gone up 41%! Yes, that’s a significant amount, in previous years it has only been a few pounds but this year it is quite a hike! I hope this pattern does NOT continue in future years.

I have tried to keep my expenses down this month and retain the money towards my holiday. Two weeks away from work! Hurray, I don’t feel guilty for having a holiday. I don’t have that duty to my employer any more. I have in the past felt obliged and worked hard, but now, I just do the minimum I can. Why should I when everyone else I work with storm out the office dead-on the finish hour!

So two weeks of bliss and relaxation calls. It will mean that next month with be an expensive one but hey! you need to have some fun while on this journey to FI. If you can’t have a holiday and some fun now and again there is no point. Time to spend reading and catching up on the things I have meant to do but have put off. Time to relax and live in the moment.


2016 Pension Summary

Its that time of year when I receive my pension statements, yet again they are depressing reading.

For yet another successive year, the ‘paid-up’ schemes are going down and the new revised plan targets using their new ‘calculators’ show my pension dropping. What is even worse this time round is that my old personal pension (which I can transfer and lose 9% of its value in ‘actuary fees’) is the most depressing reading. They are quoting a growth rate of 2.4% and an inflation rate of 2.5% … in other words …  a negative growth rate – no wonder we are so disillusioned with the financial services industry.

I am considering moving this to a SIPP and taking the hit of the 9% loss in transfer value and try and make this up by new contributions (I cannot re-open this scheme in its current form, its ‘paid-up’, so it is stuck in this strange limbo where I cannot do anything but watch it being eaten away by inflation and their scheme ‘administration fees’).

I am not surprised by the lack of trust in the pension arena when you see money saved just disappear in charges and locked in policies which restrict what you can do with them. Because it is an old scheme, they will not support the new pension reforms and I would need to transfer this to another scheme to gain any access to the new pension freedoms (losing my 9% in fees in the process!). This shows how these freedoms have not really made any difference to those people who heard the messages at an early age and started schemes as soon as they started their working lives over 20 years ago.

I am glad I am monitoring these schemes, what if I had just left them and not monitored them? I could just be the ‘head in the sands’ type person hoping that the pension company was doing the right thing and that the scheme was growing and that when I reach my retirement age I would have some money – well – based on the current forecast, I doubt I would have much left to take. Its a sad state of affairs when the general public are so unknowing and trusting of these financial institutions to look after and grow your money for you. People need to take more interest in their financial affairs and keep an eye on these so called experts.

Looking overall at the final salary schemes that used to exist. Now that companies are globally owned, it doesn’t take much for a global parent to dump a company and leave the pension scheme in a mess. I have a final salary scheme which is now deferred and should pay out a guaranteed sum when I reach retirement – but will it? If the company is bought by a foreign parent then asset stripped by a foreign parent, anything could happen. The number of large UK corporations that have gone bust after years of successful operation due to global pressures.

My current employer was a long-standing manufacturing employer and has lots of history but it has shrunk over the recent years as global competition has picked up and it has now fallen victim to the foreign buyout and now has a foreign parent that has no interest in the history or any loyalty to is past or present employees. This also means you cannot guarantee that a long-standing UK company will still exist in years to come as they are under global rules of operation and need to provide the profits and sales growth expected by their foreign parents and if they don’t succeed (even though they are doing well in the UK market) they will be dropped like a hot brick. The results of this can cause what would be a good UK company into administration and resulting in the end of an era.