Using Pension lump sum to pay off mortgage

richardhall

Hi All,
I currently have a repayment mortgage with 23 years left to run and a money-purchase pension to which my employer contributes a sum equal to 10% of my salary. As I am now well into the higher-rate tax bracket would there be any mileage in switching my mortgage to an interest only one and making additional payments into my pension with the intention of using a lump sum on retirement to pay off the outstanding captial. I intend to retire in just over 23 years anyway.

Just shout if any more info is relevant.

Thanks,
Rich

Pegleg2001

You are I presume thinking to pay off the capital out of the 25% tax free lump sum? The way things are going this may not be available in 23 years time. As we have seen, the government can change the rules overnight.

It is probably better and safer for you to put your investment in a savings vehicle where you retain access to the funds (ISA, endowment, etc).

Just my layman two pennethworth.

dunstonh

I wouldnt rely on the "pension commencement lump sum" being available. Note, it isnt called tax free cash anymore. A sign of things to come? Plus the Govt have mentioned the removal of the lump sum a number of times in the past and the NPSS due to come in 5 years time has no mention of a lump sum benefit as part of it's make up.