Wealth Check: Oil engineer seeks way to take a career break

After eight years on the North Sea rigs, one man wants a home of his own, perhaps to work for VSO, and a safe haven for his badly battered savings

For two weeks in every month, Lee Roberts sits on an oil rig off Norway. The 35-year old field engineer has worked for Schlumberger Drilling and Measurements for eight years. "I'm what's called a 'home country rotator'," he says. "That means I'm on a two weeks on, three weeks off rotation schedule."

Although the work can be physical at the start of drilling operations his job is primarily monitoring. "It's not that demanding but there's a considerable burden of paperwork," he says. "It's quite easy to lose 12 hours to desk work."

Mr Roberts was born in Liverpool and studied geology at the city's university before a master's degree in petroleum exploration at London University. "I'm a geologist by trade," he says. " But I suppose I was attracted by the money side of the oil business."

He has rented a housing association flat in Toxteth, Liverpool for 15 years and pays £168 per month. "I would like to own my flat," he says. "But when I applied to the council for the right to buy I was refused permission because I could not buy the freehold under the rules in The Housing Order 1987. But as it was my intention to only buy a leasehold I was rather confused."

He has spoken to the Government's right-to-buy unit in London, which is pursuing the matter. He is worried he will lose his right to buy. Mr Roberts also wonders if it is a good idea to buy his flat now, or wait to see which way the housing market goes.

He saves £300 a month in an Egg internet account which stands at £29,000. He has a Fidelity Pep which is spread across four funds, and a Fidelity Maxi S&S Isa which is spread across three. His initial investment for the Pep was £8,233 but it is now valued at £5,708. He invested the full £7,000 in his Isa but this now stands at £4,517. He has avoided buying more stocks and shares, preferring to leave the money in his Egg account. "What do I do with my savings?" he asks. "Is there a better savings account I could put them in and still have the option of reasonable access with good interest rates? I have lost a third of my investments recently, so should I keep my nerve and wait it out or sell up and put the money into my Egg account where it would at least make some money?"

Mr Roberts is a member of Schlumberger's final-salary scheme and pays the maximum employee contribution of 6 per cent (£187) a month directly from his pay. He wonders whether he should increase his monthly savings or make additional voluntary contributions.

After eight years in the same job he is thinking of a career break. "I'm considering working for the Voluntary Service Overseas but this depends on whether they can make use of me," he says. "I'm even thinking of starting on a completely new path. I could return to university and study something different, but the way university costs are going this is becoming highly unlikely."

We put his case to Milena Atanassova, independent financial adviser at Rickman Tooze, Nikki Foster, savings and investments manager at Chase de Vere Investments and Ken Rayner, head of product development for investments at The MarketPlace, Bradford & Bingley.

Profile: Lee Roberts, 35

Status: Single;

Occupation: Field engineer for offshore oil industry;

Education: Geology degree from Liverpool University; master's in petroleum exploration at Royal Holloway College, London University;

Salary: £20,000 to £32,000 a year;

Debts: None;

Motoring: Ford Fiesta; Suzuki Bandit and Kawasaki GPz motorbikes;

Savings: £29,000 in Egg internet account; Fidelity Pep and Isa;

Pension: Company final salary scheme;

Property: Renting housing association flat in Toxteth, Liverpool;

Outgoings: Water £16.45; council tax £66; gas £23.50; electricity £13.50; telephone £30; petrol £30; food £150; clothing £30; social events £200.

'Get your flat under right-to-buy and save up for your dream'

Solution 1: Flat

Mr Rayner thinks it is a good time for Mr Roberts to buy his flat. With interest rates at a 48-year low, home buying is extremely affordable and he also has the benefit of a large deposit. Nobody knows for sure how the housing market will perform over the next few years, but properties in the price range of Mr Robert's flat are unlikely to fall massively in value.

Ms Foster says house prices in Liverpool have risen 21 per cent over the past year, compared with a 25 per cent average rise in the UK. The average house price in Liverpool is £84,078, still well under the UK average of £123,451. She thinks if Mr Roberts can afford to get on the property ladder he should go for it.

Ms Atanassova says Mr Roberts is justified in worrying that his right-to-buy discount could be reduced or cancelled by forthcoming legislation. Measures to restrict the number of council houses being sold through right-to-buy schemes were outlined by the deputy Prime Minister, John Prescott, at the end of last month. Discounts to tenants buying their homes will be cut from the maximum £38,000 to £16,000 in 41 council areas in London and the South-east, where soaring prices have meant many people are priced out of the housing market. But she thinks there must have been a mix-up when Mr Roberts first applied for his right to buy, since The Housing Order 1987 (extension of the right to buy) applies only where the property in question is a house and not a flat, as in Mr Robert's case.

Solution 2: Savings

Ms Atanassova says Northern Rock offers a rate of 4.15 per cent on its Tracker Online account, which is better than Mr Roberts's Egg account. This applies to balances of £1 and more and is guaranteed to be no lower than 0.5 per cent below the Bank of England's base rate. The account can be operated by the internet and any additional investments can be made by post.

Ms Foster says Mr Roberts has been well-advised on the funds he holds in his Pep and Isa. Fidelity is an excellent fund manager. Markets have performed poorly for the past three years and although his investments have fallen in value they have held up exceptionally well in the present climate. It is an excellent time to invest more money while prices are low.

Mr Roberts should consider investing some of his regular savings into an equity-based fund such as New Star Distribution to benefit from the upturn in the market when it comes. By investing monthly he will benefit from pound-cost averaging.

Mr Rayner says although Mr Roberts has invested in a range of funds they are all with the one provider and all in equities. He should reduce his exposure to shares and consider investing in gilts or bonds to create a more balanced portfolio.

Solution 3: Pension

Ms Foster says a final-salary scheme is among the best pensions around. As he may want to take a break to go travelling he should put as much as he can in to the pension now to cover the months when he will not have any income.

Ms Atanassova says that since Mr Roberts has been a member of Schlumberger's final-salary pension scheme for eight years, assuming he remains in service until the normal retirement age of 65 he can expect an annual pension equal to 63 per cent of his final basic salary. But should Mr Roberts decide to retire earlier, the pension would be cut back severely to reflect the fact that his pensionable service is shorter and the pension will be payable for longer. For example, if Mr Roberts chose to retire at age 55, then the estimated pension available then would be just 28 per cent of his final basic salary. If Mr Roberts starts additional voluntary contributions equal to 9 per cent of basic salary, this would increase the pension available at age 55 to 40 per cent of final salary.

Mr Rayner says Mr Roberts should consider a stakeholder pension. It is inexpensive, with charges capped at 1 per cent per year and, unlike AVCs where the benefits usually have to be taken along with the main scheme at normal retirement age, stakeholder benefits can be taken any time after age 50. They are flexible and even if you are not working you can still get tax relief on your contributions. This could be handy if Mr Roberts takes a career break.

Solution 4: Career break

Ms Foster says Mr Roberts is fortunate, since he has a reasonable amount of savings, but before he makes investment decisions he needs to decide whether he is going to take a break, because this will affect all future investment decisions. If he needs to use capital to travel it will affect how much he has as a deposit on a property.

Ms Atanassova says if Mr Roberts decides to take a career break and travel for six months he should keep enough money on deposit to fund his travel costs and have reserves on which to draw when he returns.

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