Jordan Grierson’s Post

Today’s post may be somewhat hypocritical, or even perhaps paradoxical, based on what I posted yesterday. Here it goes ……. some contractors are purely in it for the money, and I also think there is nothing wrong with that either. Hear me out for a minute. Just because someone is money motivated, doesn’t mean they’re not good at what they do. It’s also not for me to judge someone’s motives, just because they’re not necessarily inline with mine. I’ve spoken with a lot of contractors over the years, and some of the reasons why they started contracting, or why they accepted their latest contract, include: - They don’t particularly like what they currently do at their perm job, so they might aswell do it contracting at least they’ll paid more; - They want to go travelling, and want to earn as much as possible, as quickly as possible; - They’re getting married and need to pay for a wedding; - They’re currently out of work, and whilst they decide what they actually want to do with the rest of their life, they simply want to earn as much as possible; - They are struggling to afford childcare; - They have debts to repay; - They have kids and their partner isn’t currently working; - They’re saving to buy their first home; - They’re due to retire soon and have an retirement income shortfall to make up Everyone’s situation is different. I can see why someone may want to ‘chase money’ in some of these scenarios. Obviously there is a balance to be found. - Will prioritising short term earnings prevent you from long term success (whatever that looks like to you)? - Has the risk/reward ratio really been considered? - Is the end goal to become a career contractor? - If you’re hoping to go back perm one day, will you have made yourself ‘unemployable’? But, ultimately everyone makes their own decisions and deals with the consequences. Maybe a little less judgment is needed for those who are ‘in it for the money’?

Always a good start to the day when you’ve almost already hit your steps target for the day before you even start work!

I believe there is a study out there that suggests happiness and earnings/income are directly correlated. However, only up to a certain limit, then it levels off. It is suggested that money earned after this limit, doesn’t actually bring any additional happiness/joy. I fully buy into this theory. Allbeit the study itself is probably outdated with todays cost of living crisis, low wages, etc. For example, if you earn 30k, and get a 10k pay rise, your happiness will probably increase dramatically as you may be able to save more money for a house, go on a nice holiday, treat the kids, get out of debt, etc. However, if you earn 150k and got 25k pay rise, would that pay rise bring you any additional happiness? I’m doubtful. What would you do with it? Invest it? So, this weeks poll, is finding out what that ‘limit’ is.

One of the digs sometimes thrown at contractors is that they’re ruthless mercenaries forever chasing a £ note. But, is that always the case? Believe it or not, there’s been plenty of times when I’ve had a ‘better’ financial offer than the one I’ve chosen. When I left my last permanent role, for my first ‘proper’ contract it was an absolutely stupid financial decision. Over the year I probably earned a couple of grand more through that contract than I would’ve if I stayed in that permanent role. Trust me, if you’re in it for the money, a couple of grand is really not worth the risk or hassle. Over the years, I’ve been asked by fellow contractors ‘would you take a perm job if the salary was X amount?’ For as long as I can remember now my answer has been no. The value of X is largely irrelevant. Even last week a recruiter messaged me about a permanent role. The remuneration package was brilliant, and the opportunity did look a good one. Yet, despite the fact that I could potentially earn near enough the same amount of mone as I do through contracting, but with none of the risk, it still didn’t cross my mind that I would like to explore this opportunity any further. It was a very quick ‘thank you for thinking of me, but I’m not interested”. As it always is. Don’t get me wrong, this wasn’t a formal offer by any stretch of the imagination. It’s therefore easier for me to say I’d say no. Maybe I’d think differently if it was a formal offer? I doubt it. If I was a ruthless mercenary surely I’d take that offer? That hand is considerably better than the hand I have now. In the past I’ve also: - accepted lower day rates because I wanted to learn a new subject matter; - left a contract I was unhappy in, without having a new contract lined up The list could go on really. Don’t get me wrong, I negotiate as hard as I can on my day rate. Those who have negotiated with me, know that. So, this definitely isn’t a ‘woe is me’ tale. I may be out of work for months at a time, it would be foolish if I didn’t try and maximise my earnings. But, I’m happy the value I bring is substantially higher than my cost. Over to you, are contractors ruthless mercenaries?

How much of a problem is financial literacy becoming? A couple of weeks ago I was involved a conversation about overtime and whether or not it is ‘worth it’. This conversation was between a couple of friends, none of which are contractors, they are your traditional permanent employees. (They don’t work in the pensions industry either). I missed the first half of their conversation, and I had assumed they were discussing whether or not it is worth giving up Saturday morning for X amount of money. A question anyone who does, or has done, overtime at an hourly rate has asked themselves. A valid question that there really is no generic answer to. However, one of them was very insistent that it really isn’t worth doing O/T in their circumstance. The individual earns mid 40’s and is therefore a basic rate tax payer. They were worried that with all the overtime they have done, they will now be close to, or in excess of, £50,270.00, which then puts them in the higher rate tax band. I was under the impression they didn’t see the value in O/T anymore as soon enough they would pay 40% income tax on the O/T, instead of 20%. (They didn’t know the limits, rates, etc., just that once you earn a certain amount of money, tax is a lot higher) However, I was wrong. They didn’t see the value in O/T because they thought all of their earnings to date would now be taxed at 40%, not just what they earn in excess of £50,270.00. (This was ignoring the fact they would also pay student loan and employee national insurance on top of this) They had been told by other people in their organisation, who are in a similar position, that there is no point in the O/T as they will pay ‘Super Tax’ on everything. Now, of course that is incorrect. Only what they earn in excess of £50,270.00 would be taxed at 40%. There is a massive difference. (In fairness, this conversation did take place in a bar was after several beers. For those of you are yet to reach your 30’s, apparently on nights out people start talking about tax more!) It is worrying that people make decisions such as this, without even a basic understanding of the financial implications. I am a big believer in the value of proper education around ‘finance’. What that would involve would of course be up for debate. I’d be in favour of dropping some of the absolute nonsense that is taught in schools, for this. I also think employers could offer a lot more around this (I know some do). But, more important than this, I think it is our own responsibility to educate ourselves (there are exceptions).

For those attending the PLSA conference this week, welcome to the greatest city on the planet 😎

Yesterday’s rant, if you can call it that, regarding the potential regulatory changes impacting tax free cash, did get me thinking. It feels somewhat hypocritical when I moan about regulatory changes in the pension industry, seeing as though they technically benefit me (and many other professions I may add). When performing a SWOT analysis, ‘changes in regulatory environment’ are typically seen as a threat to companies that operate in regulated industries. They drain resources enormously and they are typically projects companies do not want to undertake. For a contractor operating in a regulated industry, that viewpoint is flipped on its head. If I was to perform a SWOT analysis of the contracting environment in the pension industry, I would be classifying ‘changes in regulatory environment’ as a major opportunity. The simple reason behind this is that companies need skilled resource to implement these regulatory changes. Contractors are, or at least should be, a skilled resource. Even if you’re not working on the implementation of a regulatory change, these change can often have a negative affect on BAU activities due to a spike in work. Contractors can plug that resource gap. In the last couple of years alone I have worked on a number of projects which are either directly due to a change in regulation, or a regulatory change has impacted my role on a project. Two huge discriminatory cases have rocked the industry in the last 10 years or so. One based on age discrimination, and another based on gender discrimination. Yes, you guessed it, McCloud Remedy and GMP Equalisation. I have worked on several GMP projects and I have worked on two schemes impacted by McCloud. Another example is Pensions Dashboards. Whilst many trustees welcomed this regulatory change with open arms, there were a large number that would want no part in this if it were not forced upon them. Again, I have worked on a Pensions Dashboard project. This is just the big hitters. There are a number of other smaller regulatory changes that have impacted my projects, such as the LTA abolition. Working on these projects also gives you the opportunity to develop your technical skills - if you have worked on schemes impacted by McCloud, or GMPe, you will know how complex they can be. If you can confidently explain some of these issues to members, and administer these schemes, then you would be an asset for most companies operating in the industry. It is a dying art. Remember that. Whether or not I am in favour of the respective regulatory change, has absolutely no bearing on my performance. The message is always the same: - ENSURE THE MEMBER GETS PAID WHAT THEY ARE ENTITLED TO; - ENSURE SCHEME(S) IS/ARE COMPLIANT WITH REGULATION;

Just imagine saving for your retirement all your working life, and you’re now at that point when you’re due to retire very shortly. You know what you want to do with your retirement savings, regardless of whether you’ve sought advice or not, and regardless of whether it is a ‘wise’ financial decision. You’ve now spent months reading the the rumours around ‘completely abolishing any tax free cash at retirement’ to ‘tax free cash will be restricted to 100k’, to whatever else has been published. What do you do? Do you try to draw benefits early due to the uncertainty? Do you have a guess at what date any changes to tax free cash will be effective from? Is it now too late to even submit your forms and draw benefits before these changes come into effect? Do you wait it out and hope it’s just rumours? Are administrators going to soon have thousands of people submitting retirement and transfer forms? What happens when they can’t meet SLA’s? Who will deal with the complaints. Regardless of whether you’re in favour of whatever may happen with tax free cash, it is a shambles. But, then again, do we expect anything different? We’ve only just had the shambles of the LTA abolition that was about as smooth as sandpaper. At what point do we just leave pensions alone for a good few years?

A relatively unproductive morning calls for a lunch time ‘therapy’ session. 8pm is my usual gym time. When the kids are in bed. When work is done. When I have no more distractions. An added bonus with getting it in now is the gym is seemingly empty