Work Pension plus Shopping Benefits

I’ve finally received my information pack regarding the company pension that I was enrolled onto with New Co in December.

The plan is run by Fidelity, I was able to easily register and log onto their website to have a peek at the new pension.

fidelity

It looks like I’m on a Drawdown Lifestyle Strategy Plan, which currently has my investments split between a global equity fund and a diversified growth fund in a 70/30 mix.  This mix will automatically adjust over time, ie more in the growth fund as the years go by and then in 10 years time, some of the equity fund starts getting switched into a ‘safer’ bond/gilt funds.  On their risk scale (1 being ‘least risky’ and 5 being the ‘highest risk’), the global equity fund scored 4 and the growth fund scored 3. The bond funds I think scored 1 or 2.

I’m ok with this and have resisted the temptation to tinker with things, although the very intuitive (and quite impressive) website allows me to easily swap and change my investments, and there are quite a few to choose from.

Unlike my colleagues, I actually checked out the funds fact-sheets, had a look at what other funds were available for investment and also compared the admin fees/management charges but in the end, I was satisfied with the default selections and default strategy. I already spend too much time tinkering with my SIPPs and ISAs so this is one less thing to distract me!

I toyed with the idea of whether I should include the value of this pension within my Future Fund and I’ve decided not to, since I don’t include my other company pension. So my Future Fund will continue to be exclusive of any work pensions.  I will however include this pension as part of my overall Net Worth calculation (since I can see how much it is actually worth).

As mentioned before, my contribution to this pension is 7.7%, New Co’s contribution is 14%, so if I can pay into this for a while, I should build up an extra tidy little pot.

When there’s a reasonable sum within this DC pension, I’ll incorporate it into my overall FI/early retirement plan but for now, I’ll leave it out.

Things at work are still quite ‘muddy’ and a little uncertain while New Co continues to try to figure out what they want to do with us. There are integration projects all over the place and our carefully drafted SOPs1 are being reviewed for the umpteenth time, having previously been reviewed by 4 (different) sets of auditors no less! Whilst no redundancies or plans for ‘restructure’ have been announced (yet), we’re starting to see a few people leave the business voluntarily – not everyone is willing to hang about waiting to see what happens (unlike me).

I’m still hoping they go for the ‘Northern Powerhouse‘ idea, since their other office is down south but we’ll see!

Oh, and I finally got my long service award for 20 years (which was in November 2015). New Co is still a little behind the times in that I received the usual award of gift vouchers but they weren’t e-vouchers, they’re old fashioned shop vouchers that I can only spend in-store! Still appreciate them anyway!

Shopping Benefits

Speaking of shopping, I’d been getting various internal ‘spam’ emails offering ‘shopping benefits’ throughout January. After overhearing colleagues talking about getting cashback and discounts off their shopping, I didn’t even open the emails and just deleted without reading properly.

Until someone mentioned that ‘shopping’ also included grocery shopping.

It looks like for certain supermarkets (Tesco, M&S, Sainsbury and Morrisons are the ones I can think of), you can purchase ‘shopping cards’ and get 4% cashback (it varies from shop to shop).

Since I’m still keeping to a grocery budget of <£25 per week, I thought I’d give the shopping card a go and bought a Tesco one for £100, getting £4 cashback. If I keep to my budget, this card will be enough for one month’s shopping.

Currently, most of my grocery shopping is covered by a credit card which is paid off in full every month. I don’t get any cashback with the credit card, just Avios Airmiles.

The shopping card is reloadable so I’m going to use the cashback I earn for future top ups.

Ok, in the scheme of things, if I only spend £100 a month on food shopping, the cashback I earn will total just £48 in one year. Some might say hardly worth the effort but this is no real effort at all! Topping the card up and checking the balance can all be done online, although your balance is also printed on the shop receipt. You then just hand over the card to pay for your groceries as normal.

Saving £48 by itself isn’t going to grow my Future Fund. However, I did also cancel my Netflix subscription a few months back saving £60 a year so all these little expenses I cut back on will continue to add up.

Anyway, I’m not really interested in any shopping cards for other shops, although am due to do a big toiletries shop for my family, so I’ll have a look at the Boots shopping card, which is offering a whopping 8% cashback!

Notes
1 – standard operating procedures

23 thoughts on “Work Pension plus Shopping Benefits

  1. Thanks for your blog – really interesting. Have you considered a Tesco Credit Card linked to a Clubcard account? We use ours for all purchases that we would have used a debit card for in the past – except cash withdrawals obviously. If you shop in Tesco (food, fuel or online) you naturally earn points, but you can also accrue points for every purchase on the Credit Card. We have it set up to pay off in full automatically, so it’s easily managed. The points also convert to vouchers, which can then be ‘boosted’ to spend on other items. For example, we boost our Tesco vouchers to travel vouchers at three times their Tesco voucher value – so £50 worth of Tesco vouchers equates to £150 worth of travel vouchers. We then use these to pay for our annual trip to Europe in our campervan using the Eurotunnel – a free crossing. Might be worth a look?

    Paul

    • Hi Paul
      Yes, I have considered using a Tesco Credit Card. However, I convert all my Tesco points into Avios Airmiles and the credit card that I use most regularly collects Avios Airmiles. Every couple of years, I get enough airmiles for a return flight to the far east. If I wasn’t collecting the airmiles, I would most certainly be making the most of the vouchers and boosting of vouchers.
      Thanks for stopping by and commenting.

    • Funnily enough, I couldn’t easily see Fidelity’s admin fees anywhere on their paperwork or website! I’ve dropped them a note to point me in the right direction.

  2. > So my Future Fund will continue to be exclusive of any work pensions.

    I can sort of see the argument don’t list what you can’t control, but I wonder if that isn’t being overly negative? After all, they do affect how much of a gap you need your future fund to resource, or at least take a bite out of that. Plus your DB component is very bond-like in its offer, which is different in risk profile to, say, your equity-based SIPP.

    So their existence could affect the risk profile of your SIPP for instance? A DB pension is sort of like having 20 times the annual pension at 65 in bonds, which would make you think differently about equity exposure in the SIPP.

    • Ermine – you haven’t seen the charges yet….

      When i was in company schemes they were enough to eat up not just the investment growth but a small chunk of the contributions

      • Response from Fidelity:

        “There are no charges for the plan other than the Annual Management Charge (AMC) and other expenses quoted on our Fund Fact Sheets.”

        Looking at my investments, the TERs for the global equity fund and diversified growth fund are 0.183% and 0.839% respectively.

        The latter is on the high side but not so high that I can be bothered to switch to another fund.

        Looks like they’re a lot more competitive these days.

    • Maybe it is me being a little negative, ermine. When my DB pension was frozen, I set about recalculating everything as if I wasn’t going to get another work pension but this obviously isn’t the case.

      There’s only two months’ of payments in this pension – perhaps when the pot grows a little, I’ll have another tinker, create another little spreadsheet scenario! Cheers!

      • Interesting discussion on including pension or not. I include my pensions as part of my total net worth (and found I had a small DB one – not a lot but when it kicks in will pay for a very nice weekend away once a year!). Given government changes to pensions etc. I know I can’t touch it now until I am 57, and I expect by the time I get close to that it will be even further out, so for living FI I am basing this without my pension which drives me to try and save harder. I do include my pension contributions as part of my savings rate FWIW as its not money I am “saving” so dont need to replace it once retiring

        • Hi London Rob

          Great news on that small DB pension – nice for you to know you’ve got that paid-for weekend away each year! 🙂

          While I don’t include my DB pension in my net worth, I was going to include this new DC pension but leave it out of my Future Fund. However, I’ve taken in Ermine’s comment and may include it from my next update.

          As my savings rate is based on my net pay (ie whatever hits my bank account each month), I don’t include my work pension contributions. It does mean that I make it tough for myself to achieve higher savings rates but I’m ok with that so will keep to it for consistency.

  3. Hi Weenie,

    I have something similar here in Australia. I’m able to access Woolworths gift cards for 5% off. Considering this is where I shop anyway, I figure why on earth not? These are actually eGift cards, so like yours, everything is done online. I don’t even get a physical card, just some numbers that I input at the register. I know I’m paying for it in their ability to track my shopping habits, and I’ve always been loathe to give away more information than I have to, but I think I’ve gotten to the point that for something as staple as groceries, I don’t really care.

    • Hi Mrs ETT
      Ah, Woolworths is a blast from my past as it was my favourite shop as a child but sadly, no longer in the UK high streets.

      But yes, if you are going to shop there anyway for basic staple stuff, why not use the gift cards? All those 5% adding up, no effort at all and all they get are your shopping habits!

      I might even use the auto-top up facility for my card, so that there’s always credit on it.

      Thanks for stopping by and commenting.

  4. That is a decent sized employer match, your doing well to be able to put 7+% in. I know so many people who think they can’t afford to put in but should be busting a gut to do so just for the free money employer match, let alone the benefits from saving on tax.

    I still run into people in there mid 50’s who just have no financial literacy especially with pensions. It just feels like they want to keep it all a big secret so they can cheat people into giving them more money.

    I think this puts a lot of people off too.

    • Hi Dom

      Yes, by all accounts, it’s a very decent sized employer match.

      You’re right, people should prioritise for that employer match but many just don’t understand the importance of the ‘free money’ aspect. During the time when I was badly in debt, I am so glad that it never occurred to me to stop my pension payments – to me, it was like tax, something that I had to pay.

      I have a close friend (in her mid 40s) who, when I asked why she never paid into the company pension said “One, pensions are a rip-off and two, I might be dead before I’m 65!”

      The thing is, she used to work with me and would have paid into a defined benefit pension plan for 10 years – estimating what her last salary was, I reckon she would have ended up with a DB pension at 65 of around £4k a year. Not huge but could be the difference between living well and having to count pennies in her retired life.

      Just seen the sub-title of your blog “Live good, eat well – save hard! With some home brewing on the side.” Great stuff, I like a bit of home brewing myself but I only do kits.

      Thanks for stopping by and commenting.

      • I’ve only done beer from kits – so far. I did make a cider straight from apples though which was very good. I didn’t have the proper equipment at the time so kind of hackneyed it together.

        I call it the cider insider 🙂

        Having a bit of trouble with the blog currently – all my pics seem to be disappearing. Might have to migrate to wordpress like you. How’s it going so far?
        Dom recently posted…Frugal valentines doesn’t have to be a dead squibMy Profile

        • I’ve only ever brewed cider from a kit! 🙂

          I have no complaints about my blogger to wordpress migration – it’s a lot easier to update and maintain using the WP interface – blogger is a lot more basic.

    • Hi MG

      Fidelity charge nothing themselves for admin of the pension.

      The TERs of the chosen investments (global equity fund and diversified growth fund) are 0.183% and 0.839% respectively.

      So pretty reasonable overall.

  5. Your new pension is a great employer match, I realise it’s a sore loss and a time of mourning to have to freeze the DB. As anticipated, some recent tinkering to my DB pension at my Firm, but it’s still in tact. For now.

    I had to go to Tesco’s for something specific last week, first time in years, and I wanted to walk straight back out again. I’m a Lidl convert and my grocery shopping costs have dropped by at least 30%. Unless you specifically like Sainsbury’s, Tesco, M&S, Boots etc the cashback still makes them a more expensive way to shop.

    • Hey Starla

      Yes, I still mourn my frozen DB pension a little but I’ve moved on (some folk at work are still really bitter about it) and hope I can contribute into this new one for a long while. Fingers crossed for your DB pension.

      Funny, around 2 years ago, I switched my main shop to Aldi, with a small top up at Tesco. However, this past year, as Tesco prices have dropped (on the things that I normally buy), I’ve now reverted back to a main shop at Tesco, with a top up at Aldi. The Aldi near me is only a small one so I was struggling to buy all that I needed but with Tesco having to drop their prices, it’s a win for me!

      I only go to Boots to buy stuff that I can’t buy in the supermarket (or if I have a shopping list from my family) because it is very expensive and also, far too tempting haha!

  6. Hi Weenie,

    It’s interesting reading your thoughts about the shopping cards. I’m a freelancer, but because I’m a member of IPSE (Association of Independent Professionals and the Self Employed) they offer an “advantages” program where I can benefit from online discounts at major retailers like Apple and discounted voucher cards for other big retailers like the supermarkets and Boots. Although I’ve used the Apple discount on several occasions I’ve never gone down the discount-card route as it felt too complicated and convoluted for me. However, it sounds like it’s actually a lot easier to make use of these cards than I had realised – so I may give it a go next time I plan to do a big shop.

    With regards to pensions, being a freelancer there’s no “company” match scheme for me per se, but I can choose how large a pension I want the company to pay into my personal pension (since I’m the director of the company!)

    I’m just starting out on the route of working out an annual budget and savings plan for the year (very new to all of this), so I don’t yet know what my savings rate will be, but when I do start tracking it I will have a similar dilemma to you – do I include the pension contributions in my savings rate or not? My goal is to retire before 50, and since I won’t be able to touch the pension until I’m 57 I figure I won’t be including it in my freedom fund calculation, but like you *will* be including it in my net worth calculation.
    I haven’t yet got my head around what the effect will be of having the pension coming online at 57 on my “freedom plan”. I guess this will impact how much money/investments I feel I need to have in the freedom fund before I consider myself FI…that’s one I’m still researching how to best work out!

    It’s great reading your post – at some point soon I’ll take a look at your back catalogue (like I’m doing with financiallyfreebyforty.blogspot.co.uk) to get a better flavour of what your journey so far has been…
    Organised Redhead recently posted…Organised Redhead’s 2016 GoalsMy Profile

    • Hi OR

      I mentioned the shopping cards to some other colleagues and they said it was “too complicated”, yet having only just started using both Tesco and Boots shopping cards (both places where I was going to shop anyway), I have already accumulated £18 cashback!

      Your dilemma re pension is slightly different because by the time I get to my planned FI age (55/56), I will be able to get my hands on my SIPP and DC pension. However, for tax purposes, I hope to build up my ISAs too so I’ll be dipping into all 3 for my income.

      I’ve been thinking about what Ermine said and I think I’ll include the pension value as part of the ‘pot’ total but for consistency of savings rate, I will continue to just measure using my net pay.

      I’m glad you enjoyed the post and hope you can find something useful in some of the older posts that you may end up reading.

      Good luck with your goals and thanks for stopping by!

  7. I used to get the supermarket gift cards when I was working for a company that offered them as part of a perks program. I use to get them all the time for all sorts of expenses. Ok, its not much but it does work out cheaper over the long term.
    I now work somewhere where they don’t have any perks, discounts, share saves or anything useful 🙁 It a sign of the times and that fact that I now work for a small company that probably will not exist in about 5 years time.
    I think this is another employer who having been bought by a foreign company will be eaten up by the parent and sold off in parts.
    My job choices seems to be getting smaller every day, so I will save harder and harder to make sure I don’t have to worry.

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