Wealth Check: Cost of adopting without Madonna's millions
Saturday 04 November 2006
John Kenny, a secondary school teacher, and his wife Jane, a nursery nurse, plan to adopt at least one child in the next 12 months. The couple have a combined income of just under £43,000 a year and no debts other than a £112,000 mortgage.
They try to save £50 a month and have a cash ISA, in Jane's name, with about £1,500. But naturally, they are worried about how adopting will affect their finances. They need to know what sort of financial support they can expect from the state, especially if Jane has to take time out of work.
John has only been a full-time teacher since 2003 (he retrained after leaving the Catholic priesthood) and requires advice on his pension. He has to catch up on the years he lost. How much income should he use to buy back "teaching years" to enhance his final pension?
John and Jane also wonder whether they should continue to live in their house in Penge, and invest in it by extending. Or they could downsize to release some useful cash.
We asked for help from David Holmes, chief executive of The British Association for Adoption and Fostering (BAAF); Tom McPhail, of independent financial adviser Hargreaves Lansdown; and David Hollingworth of independent mortgage adviser London & Country.
Case notes: John and Jane Kenny, Penge, south-east London
Income: John, a teacher, earns £32,000 a year; Jane, a nursery nurse, earns £10,800.
Savings: £4,500 in Alliance & Leicester Premier Plus; joint current account with Alliance & Leicester with £1,000. Jane has £1,500 in an ISA.
Debts: Mortgage (Portman Building Society) of £112,000, taken out October 2005 for five years at 4.45 per cent.
Monthly outgoings: Just over £2,000 on living expenses.
All local authorities are required to provide a range of adoption support services, says David Holmes. However, entitlements are worked out on a case-by-case basis after assessment of needs and resources.
Each authority has its own means-testing system, but John and Jane will be entitled to an assessment. Adoption legislation sets out certain circumstances that create eligibility for consideration of financial help, but there is no automatic entitlement. Holmes says financial help can only be given so long as it does not duplicate any other tax or benefit to which the adoptive parents are entitled, and it is always means-tested (see www.direct.gov.uk).
However, John and Jane will be able to claim Child Benefit from the day the child comes to live with them. Paid adoption leave is available to either Jane or John if they adopt, Holmes adds. Jane should be able to take up to a year of adoption leave, though only nine months would be paid, and not at full salary.
John joined the Teacher's Pension Scheme when he was 43, so assuming a retirement age of 65 based on his current salary of £32,000, he can look towards a pension of £8,800 a year in today's terms and a lump sum of £26,400.
Tom McPhail says that, apart from buying back years in the scheme, to which John should devote as much resources as he reasonably can, he would not suggest any other pension investments. John should also look further into the denial by the Catholic priesthood to give him the funds they had put aside for him before he left; it could go against the Pension Acts of 1993, 1995 and 2004.
On savings, McPhail advises John and Jane to concentrate on building up spare savings in ISAs.
Property renovation would probably be the best option, says David Hollingworth. Downsizing might be a mistake given their plans for a larger family. Another option might be to rent the house out and raise the deposit for a new one against the existing one. This would mean a significantly higher mortgage borrowing across the two properties.
There is spare equity in John and Jane's property that could be released via a mortgage that will offer a cost-effective method of finance for redevelopment of their home. John and Jane should get quotes for extensions and factor in all other costs. If the mortgage looks affordable, this is a good option that avoids the costs of buying a new home.
For a free financial check-up, write to Wealth Check, 'The Independent', 191 Marsh Wall, London E14 9RS, or e-mail email@example.com
The 'no-hang up' scam targets vulnerable people - and your bank may not protect you
Under new state pension rules we will all be much worse off
Budget 2015: George Osborne is set to get tough with further cuts in public spending
Energy giants overcharge us by almost £2bn as 70% of customers are on the wrong tariff, warns CMA
If a bank calls about transferring money because of fraud, you risk losing your life savings
- 1 Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
- 2 Nick Kyrgios calls former Olympian Dawn Fraser a 'blatant racist' after she tells Wimbledon star to 'go back where their parents came from'
- 3 World learns of app that shows you who unfriended you on Facebook, app promptly crashes
- 4 Chris Moyles reportedly set to make radio comeback with new breakfast show on XFM
- 5 The Greece debt crisis explained in less than 100 words
More Britons believe that multiculturalism makes the country worse - not better, says poll
Osborne to cap family benefits at £23,000 – announced ahead of his post-election Budget
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
Sickness and disability benefits could be reduced by £30 a week as part of £12bn welfare cuts
iJobs Money & Business
£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...
competitive: SThree: Are you passionate about sales?Do you have a keen interes...
£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
Day In a Page
In a new collection of flats, this first-floor two-bedroom apartment offers ample entertaining space and a prime view of Furze Green from a private balcony.
This three-bedroom stone-built cottage currently trades as the village store with a restaurant in the annexe and family accommodation on the upper floors.
Previously two semi-detached properties, this five-bedroom home is spread over three floors with a large breakfast kitchen, orangery, office and gym on the second floor.
This five-bedroom home enjoys countryside views over the Blyth estuary to Southwold, offering flexible living space with a ground-floor annexe - ideal for use as a holiday let.
Close to the market town of Eye, this four-bedroom detached home offers a double-height living room which takes the place of the original, 19th-century, chapel nave.
Dating back to the 19th century, this four-bedroom home needs modernising. Spanning three storeys, the red-brick house has a fireplace, a small terrace and a cellar.
Just outside of Cambridge, this single-storey home offers three double bedrooms, a living room with vaulted timber ceiling and ladder steps that lead to a mezzanine study area.
This six-bedroom Georgian home is on three floors with open fireplaces, a two oven Aga, an annexe, and cottage gardens with outbuildings and a car barn.
A former coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, an attached office, kennels and an outbuilding that's currently used as a gym.
Located beside an impressive Victorian viaduct, this four-bedroom home has an open-plan living area that is glazed on two sides, with skylights and high ceilings.
A former furniture workshop, this three-bedroom home has high ceilings and painted brick walls, in a village setting only fifteen miles from the coast.
This five-bedroom stone townhouse features a pine staircase and an Inglenuk fireplace, double doors from the lounge give access to an enclosed courtyard.
This five-bedroom, detached home blends traditional and modern design; the sleek kitchen features a gas hob and oven set within an exposed chimney breast.
Moored in Chelsea's Cheyne Walk, this houseboat offers two double bedrooms and a teak deck that's ideal for al-fresco dining.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B or countryside retreat, subject to change of use permissions.
This Grade II-listed three-bedroom home is situated on a private road, just a short walk from the sandy beaches of Frinton-on-Sea.
Less than five miles from Malmesbury, this four-bedroom cottage comes with equestrian facilities and gardens that extend to approximately three acres.
Spanning three storeys, this late-Victorian five-bedroom farmhouse is a spacious family home with a modern interior and B&B potential.
With an original church arch, this triplex one-bedroom church conversion has a light, spacious, feel and comes with a secure off-street parking space.
This recently-refurbished three-bedroom home has bi-folding doors that lead out to a decked seating area - ideal for alfresco dining this summer.
Well-located for coastal walks and popular restaurants, this detached four-bedroom home offers views over farmland, to the Solent, the Purbecks and Bournemouth.
If you love high ceilings, school conversions like this one are bang on the money. This two-bedroom flat is minutes from Burgess Park and the foodie haven at Borough Market.
Set within a church conversion in Bermondsey, this two-bedroom maisonette combines existing features, such as original arches and brickwork, with a contemporary finish.
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
This four-bedroom home offers a vaulted ceiling in a breakfast room that's ideal for summer entertaining with doors that open to the patio and garden.
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.