It seemed like a good idea at the time...

Matthew and Peggy Dickinson
Ages: 31 and 30
Live in: Salisbury
Occupations: Wine broker and teacher
Earn: Jointly ?50,000
Mortgage: None
Debts: Car loan ?6,000
Investments: ?25,000 in savings account
Pensions: Group personal pension and occupational
scheme
Aims: Advice needed on mortgages, pensions and
savings

After a disappointing sojourn in France, Matthew and Peggy are finding their feet again in the UK.

They had moved there in 1999 when Matthew was offered the job of marketing director for a French Chablis producer. He says: 'It was one of the those jobs which sounded great, but it didn't turn out quite as I expected.'

They returned to England earlier this year and Matthew is now working happily in the management team for a firm of wine brokers.

However, other aspects of their life remain to be sorted out, including finding a suitable house and mortgage. They sold their previous home before leaving for France, expecting the move to be permanent.

'We got a good price at the time,' says Matthew, 'but that was just before the property market went up considerably. Now we are struggling to find a suitable house that is within our price range.'

They have been offered a mortgage in principle by their former lender, Nationwide, although Matthew admits he has been 'rather lazy' and has not shopped around for competitive quotes. He expects they will use most of the money in their savings account - which was the profit they made on their old house - to cover the deposit and cost of moving.

They would like advice on future saving. 'Because we have not had a disciplined approach to savings, we do not make our excess money work for us and thus it tends to get spent quicker than it should on things like meals out.' He feels they could afford to save between £100 and £200 a month.

Matthew is a member of a group personal pension into which his employer pays 5 per cent. He has recently increased his own contribution from 7.5 per cent to 12.5 per cent. It is a Sun Life scheme and he splits his contributions equally between the managed fund and the UK equity fund.

But he is worried that he does not really understand how this type of scheme works or whether it will 'deliver any hopes of early retirement we might have'. He had previously belonged to final-salary schemes when he was a wine buyer for Sainsbury's and then Thresher before to his move to France. 'Those schemes were a lot easier to understand because you knew precisely what you could expect at retirement.'

Peggy's pension is also of concern. She has only recently joined the teacher's scheme and they wonder if she should supplement it, perhaps with a stakeholder pension.

They would also like advice about a savings scheme for their daughter, Victoria, who is 18 months old. At present they are putting her child benefit into a National Savings account but would like to know if there is a better way of putting money aside for her.

Adviser 1: Amanda Davidson

Matthew and Peggy need to build on the
foundations they have laid for their financial
future. They need to make sure they get the best
mortgage deal and the easiest way to do so is to
use a specialist mortgage broker. Not only might
they find they can borrow more, but they could
get a more competitive deal.

As to pensions, Peggy is right that she can invest
in a stakeholder. She should also investigate
buying added years. Although these can look
expensive, they can be good value when
assessed in the light of inflation, and the benefits
are not subject to investment volatility.

Matthew is right about the different nature of his
current pension scheme compared to his previous
ones. His potential pension will depend not only
upon the growth rates of the investment funds he
has chosen, but upon annuity rates when he
retires. If he is concerned, he needs to speak to
an independent financial adviser.

Any savings the couple can make should probably
be spent on pensions as they need to make sure
they have sufficient to retire on before thinking
about other types of savings plans.

As to Victoria's savings, this money should be
invested in the stock market if they are looking to
continue until she is 18. A simple unit trust savings
plan is probably the easiest option and they are
flexible.

Finally, taking out extra life assurance for Peggy
would be advisable and is not expensive.

Amanda Davidson works for financial adviser
Holden Meehan.

Adviser 2: Andrew Jones

The mortgage that Matthew and Peggy have
been offered is quite large in comparison with
their earnings. Low mortgage rates make this
affordable, but there is no guarantee that rates
will stay low.

As most of their savings are likely to be used up
when they buy their new home, they should use
any surplus income to build up a cash buffer of
about ?5,000 in a normal savings account to act as
an emergency fund.

Matthew is making good contributions to his
pension scheme. His choice of the managed and
UK equity funds are appropriate because he has
many years to go before retirement, and can
afford to take a fair degree of risk in the hope of
earning good returns in the long run.

Peggy should find out exactly what her pension
ben efits are likely to be. As she still has more
than 30 years of potential service, extra
contributions are unlikely to be a priority at this
stage.

One area they should look at urgently is their life
cover. They should consider a policy to provide at
least ?200,000 of cover on each of them, in
addition to their death in service cover. They
should also think about critical illness cover.

If they intend to maintain their daughter's saving
for the long term, they may want to consider the
greater growth potential of equity-linked funds
such as unit trusts. Aberdeen and Invesco
Perpetual offer unit trust schemes for children
with specially low minimum investment limits.

Andrew Jones works for Deloitte & Touche Private
Clients

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