Advice on extra payments

Steve999_2

Hi everyone,

I have 2 pensions. My main pension is superannuation through NHS. I can achieve a max of 32years with this. The most they allow is 40years, it is very expensive to pay extra and purchase the extra 8 years. The 2nd pension is a personal one from AXA which SERPS used to go into.

Can someone give me basic advice on the following please as I want to pay extra into one of the funds.

Should I,
1. Pay as much as I can into superannuation
2. Pay extra into AXA pension
3. Pay extra off my mortgage
or
4. Something else?

Regards

Steve

dunstonh

1 - buying of added years is usually the most expensive on face value but often the best option
2 - AXA have a range of pensions over the years and one of their two current offerings is pretty rubbish. It depends on what AXA pension you have and the options available with it.
3 - an option worth considering but remember that when you finish it early, you will then have to look to retirement planning then as its on thing having a house in retirement but another to be able to afford to keep it. Putting off until tomorrow may result in you never doing anything.
4 - Equity ISAs tend to the "other" option. Flexible, tax free and able to provide a regular income in retirement without impacting on personal allowance or tax position.

jem16

I decided to buy back added years for my teacher's pension, a final salary pension like the NHS.

It was more expensive than the AVC route but I was advised that it was the best way.

Steve999_2

Thanks to all so far. I've got a feeling the most painful route will be the most beneficial one. I will check out equity ISA part of this site though.

homersimpson_3

3 - an option worth considering but remember that when you finish it early, you will then have to look to retirement planning then as its on thing having a house in retirement but another to be able to afford to keep it. Putting off until tomorrow may result in you never doing anything.

Can you please clarify exactly what you mean? If you pay off mortgage early when you retire you would have utility bills, council tax etc and maintenance of house. If you lived in rented flat you would still probaly have to pay bills but maintenance carried out by landlord. Are you saying people who own house and retire later need more income and thus should save or invest more. If so how much more? Is there a set formulae or guide to percentages etc?

dunstonh

Its more a point that if you focus all your money into one area, then the other areas will suffer. In this life we have to budget for all sorts of things and it is easier to prepare for retirement by starting early rather than later.

If you need around £250,000 by retirement, then its easier to prepare for that with 30 years than 10 or 15.