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Increasing private pension to lower student loan repayments?

Hello all,


Forgive me if this is in the wrong place, but I'm new.


I basically have a student loan that I pay back through PAYE weekly from deductions from my earnings. As we do a lot of overtime my payments each week jump from around £7 (base) to approximately £40/week


The amount I have outstanding on my student loan means that I very much doubt this will be cleared in the 30 years and subsequently any remaining will be written off.


My question is: Is it possible to increase my private pension contributions as a way of lowering the payment I will make to the student loans company? IE, will the student loans company take their amount AFTER other deductions such as my pension deductions have been taken in to consideration?


My theory is and hopefully it will work is that if It's going to end up being written off in a few years then I would be better off putting the surplus income in to a provate pension as opposed to the student loans company and will have more in the pot in the 30 odd years before I retire.


If this may be feasible could somebody point me to the direction of who I need to speak to first. My employer? My private pension company? Student loan company?


Thanks in advance


Matt

Comments

  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
    10,000 Posts Eighth Anniversary Name Dropper Photogenic
    edited 1 May 2018 at 10:29AM
    [STRIKE]Paying more into your pension will not change your student loan repayments. Your student loan repayments are based on your gross income before any pension deductions.[/STRIKE]

    https://www.uktaxcalculators.co.uk/

    Edit: The tax calculator above is incorrect.
  • I appreciate the clarification Pixxie. Many thanks!
  • I salary sacrifice into my works pension & a share save scheme, these two do mean that I don't pay any student loan back (in a normal month, if I do overtime sometimes it tips me over for the month & I pay a little).
    At my last payrise I specifically increased my salary sacrifice to both to keep me just under the threshold for repayment. & Also because it was a no brained with my employer paying in more too.
    I guess it depends on how your pension contributions are made. If it is a purely private pension you pay into yourself & not your employer you won't save on student loans. If it's salary sacrifice, you may do.
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
    10,000 Posts Eighth Anniversary Name Dropper Photogenic
    Actually, I stand corrected. It appears graduates can reduce student loan repayments through salary sacrifice.

    http://www.yourmoney.com/retirement/how-salary-sacrifice-can-reduce-student-loan-repayments/

    The tax calculator I linked to earlier is not calculating tax with student loan repayments and pension contributions correctly. This one does however: https://listentotaxman.com/
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