Planning for future to mitigate exposure to Brexit

ReesesPieces

Registered User
Messages
17
Age: 35
Spouse’s/Partner's age: 37

Annual gross income from employment or profession: 38,500
Annual gross income of spouse: 48,000 (Sterling)

Monthly take-home pay: approx 5,500 [2,550 (me) + approx 3000 euro (spouse)]

In general are you:
(a) spending more than you earn, or
(b) saving? 0

Wiped out savings to get under 50% LTV when buying our house, then saved up to buy car outright last year so savings down to zero but will get them back up soon - we can generally save about 2k a month with typical outgoings on our current salaries.

Rough estimate of value of home 520,000
Amount outstanding on your mortgage: 205,000 (27 years remaining)
What interest rate are you paying? 2.75%

Other borrowings – car loans/personal loans etc: None

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card?

Savings and investments: None

Do you have a pension scheme?:
Me - UK pension with current transfer value of £25k, which I plan to leave where it is. Hoping to set up pension in next few months.
Spouse - no private pension in Ireland, current UK pension is career average but there is talk about it being switched to defined contribution which would be a significant loss as he's only been paying in for four years.

Do you own any investment or other property? No

Ages of children: None as yet

Life insurance: Life cover for the mortgage but not beyond that

What specific question do you have or what issues are of concern to you?

We're both from Dublin but spent a decade in the UK before deciding to move home for good six months before the Brexit vote and ensuing uncertainty/currency changes. My husband still works in Northern Ireland, so his earnings and pension are in sterling, and the value of his salary in euro has dropped by 20% since we made the move. Neither of us has a euro-denominated private pension. I'm worried about our exposure to currency fluctuation, and the fact we're quite underprepared in terms of pensions in general.

We currently plan to do some significant and necessary work to our house (circa 100k) and to start a family this year. Both will increase our outgoings (mortgage and childcare). We are 100% committed to staying in Dublin long-term and raising our family here, but uncertain about the best thing to do to protect ourselves in the long and medium term, especially since our outgoings are likely to increase.

Should we be paying a large % of my salary in pension contributions now, to protect against the risks of our existing pensions being in the wrong currency? Should we prioritise building up more of a buffer in terms of liquid savings before I go on maternity leave/we have additional childcare costs? Should we be paying down our mortgage and putting a more meagre amount in pensions?

Would appreciate views on this, and any other steps we can take to protect ourselves from what may be a fairly volatile few years.
 

so-crates

Frequent Poster
Messages
1,762
As you have moved home for good, is there a reason you want to keep your current pension in the UK? If it was me, my thinking would be that I want a pension in the currency that I will be using going forward. It would remove your currency risk for your existing pension fund and make it easier to start pension planning in Ireland. In terms of current arrangements, whatever you choose to do with your existing pension fund, checking out the Pensions Authority calculator might be a good place to start.
 

RedOnion

Frequent Poster
Messages
3,296
Forget about Brexit and currencies for a minute.

You've the same questions as everyone else in your position.
Well done in getting below 50% LTV. You're on the best rate available, unless you wanted to switch to UB 4 year fixed rate which might give you some certainty on outgoings and remove rusk of interest rate rises. I think your balance has to be over 200k.

You've currently got a very manageable Mortgage, and no other debts.

I'm assuming you'll be adding to the Mortgage for home improvements? It'll still be manageable, but with your main household earner being in GBP there are complex stress tests brought in through the Mortgage Credit Directive in 2016 in relation to foreign currency mortgages. You might struggle to borrow the money, so I'd check that out before getting too excited about extending / renovation. You might be limited in what you can borrow, and save for the rest.

Next, starting a family. The first child is most expensive. You need everything, and you buy stuff you don't need! Having children will cost as much as you allow it to, after your main cost of childcare. If you've family / close friends who already have children, they'll have lots of barely used or unused clothes that they'll be delighted to get rid of, don't be embarrassed to ask.
I'd recommend building up a cash buffer to give you options. You might want to take some extra unpaid leave - you're in a good financial position, so it'd be nice to have the option, especially if your other half isn't always home.

You're still young. Don't stress too much about pensions once you're using the money to pay down / avoid debts.

Now back to currency.

Your GBP pension value isn't enough to to worry about in the greater scheme of things.

Now, does your other half plan to continue working in NI indefinitely?
 

ReesesPieces

Registered User
Messages
17
Thanks for replies.

The reason for leaving the current pension where it is is simply that I looked into it when we moved and it seemed as though there would be quite a lot eaten up in fees and currency if I moved it, and that it would not be a simple process.

I was wondering about switching to a fixed mortgage at this point, and its something to look into, but I'm not sure if it would be easier to wait until we have the work done first. We are reasonably confident about getting a mortgage for the increased amount but will be looking to lock that down shortly. One way or another at least half the work has to be done as a necessity and the rest will add value: the house has already gone up quite a bit since we bought it so its actually possible the work we do will keep us to the same LTV.

We are among the last of our friends to have children so there will be a lot of hand-me-downs available, I think childcare is one of my biggest concerns plus I guess classes/activities/etc - it won't kill us to miss some of these things, but I suppose it would be good to have the option. So I take the point about the cash buffer.

My husband will probably be in NI another 3 to 7 years - he's in a v specialist area, there will eventually be a role for him in Dublin (or, if it comes to it, maybe Galway or Cork, though Belfast is a handier commute than either of those) but its hard to predict when it will be. Its essentially a case of waiting for someone to retire or move, or a new role to be created. He has the flexibility to work from home two days a week, which helps make it bearable. Where he is, it is actually the best pension deal he could get, and if sterling stays stable or gains again he would be in a better position pension-wise than if he moves to an equivalent role down here. But there's obviously a big risk there.
 

RedOnion

Frequent Poster
Messages
3,296
Just on the fixing piece, there's nothing to stop you fixing part or all of your current mortgage, and drawing down the additional as variable.

I would recommend you speak to the bank about possiblity of getting additional funds with GBP income. Some banks are more flexible, because they have the ability to offer you FX hedging to satisfy the directive.

Overall, it's great to see you thinking ahead so hopefully it all works out for you.
 
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