Pension V Student debt

hugheskevi

So if they never become a higher rate tax payer you would still advocate putting all the money into S&S ISA?

The point is you get the same outcome putting money first into an S+S ISA and later into a pension if you are always a basic rate taxpayer (other than a few possible buy/sell costs). If things change (eg access to salary sacrifice or higher rate taxpayer) you gain.

So by putting the money into an S+S ISA first, it is a heads I win, tails I don't lose situation. Whereas if you put the money straight into a pension as a basic rate taxpayer with no salary sacrifice you forfeit the chance of a better outcome if things change.

In this particular case there isn't enough information to say whether a S+S ISA would be best, but in general an S+S ISA is better for a basic rate taxpayer with no salary sacrifice and no means-tested benefits than a pension for saving beyond that needed to get maximum employer pension contribution.