QI am expecting my first child and about to go on maternity leave. I am considering extending my maternity leave by a few months but am concerned about the impact on my pension. Any extended leave will remain unpaid and pension contributions would also be waived during this period. How can I prevent losing my pension if I take a longer leave of absence?
A According to Lockton Ray McKenna, a partner at the pensions specialist, any time off from work has potential short- and long-term repercussions. Limiting time away from work prevents one from losing too much financially, not only in terms of retirement but also in terms of career and salary prospects, he said. Ideally, you should return to work after your parental leave. You have the right to return to the same job and pay, and this will benefit you in terms of your future pension. If you decide to extend your leave, or if you have suspended or reduced your pension contributions while on maternity leave, make up for the time lost in returning to work by contributing as much as possible to your pension. A smart way to do this is to make the most of your employer’s pension contributions and maximize the annual contributions you can make. With many company pensions, the employer pays a contribution to the pension fund. The employer can even double your contributions. So the more you save into your pension pot, the more your employer pays into it. Another sensible step is to tie future raises to your pension contributions, so you use part of the raise to save for your retirement, Mr McKenna said.
Q My wife and I are considering buying our house from the council after receiving a great offer to sell. However, it’s a big step from renting to buying, and while we have a saving habit and could afford the mortgage, we worry that we’ll have a hard time borrowing the money since we haven’t saved much. What can we do?
A Under the new phased tenant purchase model introduced in 2015, eligible participants can receive discounts of between 40 and 60 percent off the property price, depending on their income. According to Kevin Johnson, CEO of CUDA (Credit Union Development Association), this is an opportunity worth considering. While you should consult all major lending institutions to make an informed decision, remember that there are other options besides banks. You may be eligible for a municipal mortgage. You should also check with your local credit union, as many offer mortgages including loans for renter purchase programs. He said to remember that the system imposes an additional fee on the house equal to the discount. During an agreed term, this fee is reduced to zero in annual increments of 2 percent of the total value of the home. If you sell the house within this set period, you will have to pay the outstanding additional cost of the house to the local authority.
Q We both work and have some credit but no money for bad days, which worries me as a mother. I spoke to my husband about this because I think we should open a savings account, but he thinks we should focus on our loans first. What is the best course of action?
A A good approach, according to Mr Johnson, would be a mix of both.
Making loan repayments is important to maintaining your creditworthiness, and it’s also a core principle of sound financial management, he said. Budgeting for these repayments is paramount. If you have some “discretionary” money to spare, it’s wise to set up a rainy day fund. This would be invaluable if either of you lost your job or source of income or had to deal with rising costs. A good average is to save one to three times the highest earner’s net monthly salary. Any funds you then have should be used to expedite the repayment of your loans. There are no fees for this in a credit union, but check with other lenders to see if they do the same. Saving through a credit union can be helpful because it generally attracts a lower interest rate when you borrow an amount that’s within your savings balance. Mr Johnson said that in his experience women are much better at saving than men.
https://www.independent.ie/business/personal-finance/your-personal-finance-questions-will-my-pension-be-impacted-if-i-extend-my-maternity-leave-42120032.html Your Personal Financial Questions – Will my pension be affected if I extend my maternity leave?