Overpay mortgage or make additional pension contributions ?

silver4444

Hello Everybody,
The company that I work for has a group money purchase, pension scheme, into which I am currently contributing 10% of my salary. I am lucky to have some spare cash free at the end of each month and I was wondering does it make more sense to make additional contributions into my pension or should I be trying to overpay my repayment mortgage ???
I have spoken to several colleagues at work and the answer is different every time.
My mortgage is split 50k interest only (endowment due to pay out in 2014) and 100k repayment to be paid by 2025. Any advice would be much appreciated.
Thank-you,
Silver4444

Smeep

I don't know how much cash you have spare, but couldn't you split it between the two? If not, I'd personally pay of the mortgage, as that's a debt that you owe.

Diddidi

I had exactly this dilemma last year and went to my IFA. The first thing he did was to assess how much was already in my pension (GPP) and what it would be worth. He then calculated how many more years I had until retirement and decided that my pension was already of a comfortable size and that I should reduce it to the minimum required for the company to contribute and throw the rest at my (then) £257K mortgage.

The rules of my pension have since changed and the company has introduced a stepped contribution which means that depending on the percentage I pay into my GPP they will pay a further x %. So I have since increased my pension contributions again and, thanks to this board, have managed to maintain my overpayments :j

So, I think it really depends on what your pension is worth. I would definitely recommend having a chat with your IFA first.

Diddi