pay off mortgage or put in pension?

Thrugelmir

waynedance wrote: »

So best to stick in savings account until the company has to pay into pension.

When is best to do with the savings after a few years?

The stock markets fluctuate widely. Yesterday FTSE 100 dropped nearly 2%. So advisable to drip feed into the market.

Paying into a pension on a regular basis is a good discipline. So start as soon soon as you can.

To achieve a pot that will give you a good income will require years of hard saving.

As others have said. While cash savings interest rates are higher than your paying on your mortgage. Then use those rather than overpaying your mortgage.

Joe_Bloggs

Year on year the FTSE 100 is down 7% this is offset with a dividend return of around 3%. Add in costs of entering, staying in and leaving the market a 4.25% in a cash ISA is not bad value for someone as ignorant as myself.
J_B.

northerner999

I don't think it's as simplistic as "one is better".

The question I'd ask yourself is whether your pension contributions are enough (using the guide on this site, half your age when you started it and you should pay that amount for the rest of your working life). If you're below that estimate, I'd increase your tax-efficient pension contributions.

If you're at or above that level then have you got the rainy day fund sorted? If not you need the savings/investments advice above and elsewhere on the site to make sure you get to a safe amount, and ensure this is earning you the most.

If you are on track with pension planning, and have a rainy day fund, then that's when you need to balance the pros and cons above. I've personally always strived to pay off debts first so my mortgage is my priority.

Thrugelmir

Joe_Bloggs wrote: »

Year on year the FTSE 100 is down 7% this is offset with a dividend return of around 3%. Add in costs of entering, staying in and leaving the market a 4.25% in a cash ISA is not bad value for someone as ignorant as myself.
J_B.

Don't overlook the tax relief and that pension savings can be invested in a variety of investments.

jamesd

Same for investments within a S&S ISA. It's simply not worth using a pension now when we know that the law is later going to require the employer to provide a pension that will increase the value of any money paid into a pension then. As with all investing, timing matters and in this particular case the timing doesn't favour using a pension at the moment.

Joe_Bloggs

Thanks Thrugelmir, Jamesd.
I have not overlooked the tax advantages and potential employer contributions to a fully funded professionally managed pension scheme.
I get an annual pension prediction / state of accounts etc. In truth it is a final salary scheme.

The pension company take the gamble for me. If it doesn't work then I pay more. If it does work then the employer pays less. If we all live longer then they change the goal posts and then I pay more.

I was pointing out the potential problems with FTSE 100 dependence.
Historic performance is not a measure of future performance but it is accurate.

J_B.

jamesd

Joe_Bloggs, I didn't intend to reply to your post. I don't disagree with you when it comes to FTSE historic performance, though it's not a place where I'd personally put a lot of my own investment money.

Thrugelmir

Joe_Bloggs wrote: »

I was pointing out the potential problems with FTSE 100 dependence.
Historic performance is not a measure of future performance but it is accurate.

My reference was by way of illustration.

I have held one investment trust in many pension plan as a core holding for many years. This year was its 43rd year of increase in annual dividend. As its invested globally. Then is a rather safe if unspectacular investment. Saves me chasing investment fads.

Noviceinvestor

Personally I have an innate mistrust of pensions and don't put anything into them over and above what I have to (eg in my company scheme). Putting money into something and locking it away for years, with other people controlling it (and whose honesty is not guaranteed) - not to mention the unknowns of government policy and economic conditions - is just too risky for my liking. I'd always prefer something I can control and which I can benefit from immediately, hence I'd do the mortgage overpayment option. But that's just me. Happy for the experts to persuade me otherwise

Thrugelmir

Noviceinvestor wrote: »

Happy for the experts to persuade me otherwise

In whatever form you choose saving is a good habit. To provide a good retirement income does require a sizable pot of capital to be accumulated over one's working life. Particularly if you have no access to a well funded employers pension scheme.

So while there is discussion as to the best route. The truth of the matter is far too many people simply aren't saving enough at the current time.