Keep pension or put extra into mortgage??

PParka

I'm currently in a company stake holder pension scheme. I put about £100 a month into it and the company matches this.

Would I be better off stopping paying into the scheme and pay an extra £100 off my mortgage every month??

If I could pay off my mortgage early, I could put more money into a pension at a later date.

£100 a month seems a lot to invest in a pension I will have to wait 35 years for. Assuming I make it to 65 :think:

dunstonh

Would I be better off stopping paying into the scheme and pay an extra £100 off my mortgage every month??

No. You would be throwing away £100 of free money every month.

If I could pay off my mortgage early, I could put more money into a pension at a later date.

Investment funds would be expected to outperform what you are paying on the mortgage anyway over the long term.

£100 a month seems a lot to invest in a pension I will have to wait 35 years for. Assuming I make it to 65

£100 is below average for a pension contribution. In reality, yours is £200 which is a bit better. One assumes you are 32 from comment of 35 years as that would match your state retirement age of 67. £200 for 35 years (ignoring increases you would make to keep up with inflation to keep it real terms) would give a final fund value around £344,000 @ 7% p.a. That would equate to a pension income of just over £20k a year.

So, as long as you keep that £200pm increasing over the years inline with inflation, that is a rough idea to what you could get back. (before tax)

wotsthat

£100 a month seems a lot to invest in a pension I will have to wait 35 years for. Assuming I make it to 65

Depends on what sort of retirement you want - £100 isn't much at all (as long as you can afford it).

I'm sure your employer would prefer you to overpay your mortgage and save them £100/ month. What they are offering is very generous - you'd have to have some really good reason for turning down this money.

jamesd

Pay attention to what funds your stakeholder pension investments are invested in and change them if necessary.

There's tremendous variation in fund performance and that's critical to getting good results. You're also investing enough for a personal pension with larger fund selection to be available if your employer is happy to contribute to that. Something like the Scottish Widows personal pension has a pretty broad range of externally managed funds in its full version and it's available from some IFAs on execution-only (no advice) basis for as little as 100 up front with 0.4% discount on the annual charges.

If you want to invest more than 100 a month, you might consider first going up to the limit your employer will match then going to a stocks and shares ISA.