Basic Pension Advice

StuTheDon

Everyone - thanks for the advice. Digger - thanks for your input but I do want to have a sizeable pension in place for retirement.

If I continue to overpay my mortgage I will have it paid off in 9 years and, by my way of thinking, save a large amount on interest payments which would outway any additional pension contribution.

Perhaps I could up my pension contribution to 1k per month, and slightly reduce the mortgage overpayment to compensate - best of both worlds?

Also - is the fund I mentioned at the start of the thread better or worse than anything else? I work in IT and have little investment experience - the above fund is simply the default fund that my employer place you in. I do have the option of changing it though.

In addition I do have an ISA which I try to fill each year with my allowance.

Thanks for the advice so far guys - it is really helpful.

bendix

I personally stil don't think it's enough, but it's your call. Yuo keep talking about reducing your mortgage but while interest rates are low that is a useful thing to do, but not essential. Don't forget also that as your earnings increase over the years, your mortgage payments will seem more and more piffling.

Anything you put extra in your pension now works the opposite way. It has many many more years to benefit from compounding.

Only you can make the call in the end, though.



By the way, the fund is ok. It's a standard global equity fund. It is my employer's default pension fund based on their lifestyling strategy. You can, of course, choose to diversify by looking at other funds they have (domestic shares, bonds, gilts, resources etc, or those focused on key markets like China or India) and get a different balance.

StuTheDon

bendix wrote: »

I personally stil don't think it's enough, but it's your call. Yuo keep talking about reducing your mortgage but while interest rates are low that is a useful thing to do, but not essential. Don't forget also that as your earnings increase over the years, your mortgage payments will seem more and more piffling.

Anything you put extra in your pension now works the opposite way. It has many many more years to benefit from compounding.

Only you can make the call in the end, though.



By the way, the fund is ok. It's a standard global equity fund. It is my employer's default pension fund based on their lifestyling strategy. You can, of course, choose to diversify by looking at other funds they have (domestic shares, bonds, gilts, resources etc, or those focused on key markets like China or India) and get a different balance.

Bendix - thanks, I reread the thread and did not realise that any AVCs I make to the fund are outside of tax - that is a major, major benefit. Would I need to confirm this for my pension, or is it a given?

If that is the case then I will look to make lump sum payments to the mortgage but bump up the pension contributions significantly.

Many thanks for the advice again.

jem16

StuTheDon wrote: »

Bendix - thanks, I reread the thread and did not realise that any AVCs I make to the fund are outside of tax - that is a major, major benefit. Would I need to confirm this for my pension, or is it a given?

AVCs attract tax relief just as the main pension does.

DiggerUK

Stu The Don,
Go for mortgage, with the roof over your head secure you can survive anything.
If you want to know were you can get a good deal on magic beans get back to me, I'm long and large in them.

jem16

bendix wrote: »

As Digger usually comes on here and recommends against pensions (whatever that means, as he confuses the tax wrapper with the underlying investments), I'm wondering what it is he is doing for his own retirement.

He and his wife have final salary pensions.

http://forums.moneysavingexpert.com/showpost.html?p=22711099&postcount=523

So he's not particularly worried.