Over pay on mortgage or NHS pension

JMHB

I’m after a bit of advice what I might be best doing.
I am 52, single with a 21 year old son, and would like to retire at 60. I reckon I can manage on an income of £12k as long as I have no mortgage outstanding.

I was with the Civil Service 30 years and have a pension currently of £6k and 18k lump sum at 60 from there.
For the last six years I’ve had three different jobs and have amalgamated those three pensions into one. That one being with a local authority employer. This is worth around £1000 a year from 65.
Now - I’m starting a new job with the NHS in January with a pay increase. My plan is to move the amalgamated local authority pension into the NHS. I will be able to afford overpayments into either my mortgage or my NHS pension.

My outstanding mortgage is £24k and due to be paid by 2032 when I am 65 though to retire at 60 I would want it cleared.

So what’s best to put some overpayments into? My Mortgage is currently fixed at 2.1% until January 2024.

I’m not sure whether I should over pay the mortgage in order to clear it at 60. Or invest into my NHS pension to increase the lump sum to then use to pay off the mortgage.

Thanks in advance for any suggestions.

MovingForwards

How much is your mortgage per month?

How much spare money do you anticipate you will have in your new role?

sammyjammy

£6k pension from 30 years service in Civil service doesn't sound right?

Jox

Maybe £6k a year rather than £6k total?

kangoora

Even £6k/year sounds low for 30 years service unless they were part-time or VERY low wages which is what I think sammyjammy was alluding to.

Is it possible the £6k is a not an up-to-date valuation. Silvertabby would probably be able to ask the correct question if she comes across this thread.

atush

savings? Any investments like ISas?

i'd be slamming extra cash into a PP/sipp or S&S isa

gozaimasu

Surely the lump sum available will increase from 18k within the next 8 years worth of work? You've only got a £6k shorfall to pay off the mortgage, you can have that in a year if you save £500/month or 2 years if you save £250/month.

JMHB

Many thanks for responses so far.
Yes £6k a year and that’s up to date. I got a CS pension statement a couple of weeks ago. Not all Civil Servants are as well paid as the media would have you believe! I’ve been stuck on a £20k salary for what seems for ever and have only ever worked in the public sector. I was a single parent from my son being 11 so it was difficult to progress. Anyway I graduated from OU last year and now have a graduate job (at 52!) in the NHS. So - to answer questions. My mortgage currently is £200 a month. I should have an extra £200 to do something with. I have an ISA (0.75% interest with Nationwide) of about £5k. Ideally I wouldn’t want to use all the lump sum at 60 on the mortgage.

MovingForwards

If you have an extra £200 then £100 to overpayment per month, £100 extra to pension (or see if you can increase your payments from your salary), the leftovers put into long term savings.

Triumph13

I don't believe the NHS pension scheme lets you leverage the DB section to take all your AVCs tax free in the way that the LGPS does so NHS AVCs don't really score over a free-standing PP or SIPP.
Pension contributions rather than mortgage overpayments definitely make sense because of the tax advantages so I would definitely be looking at that route.
What is your plan for the period from retirement at 60 to state pension at 67? Are you intending to take the NHS pension early and if so will it (plus the CS one) give you enough to cover your required £12k pa?

atush

With 200 extra a month, and all your DB pensions paying out later than age 60, you need to save outside of the NHS pension. In a PP or Sipp. To fund those years less than the DB pensions pay out. 200/month for 8 years is unlikely to be enough time. Can you save more? Does your 21 yr old live at home? Are they working and paying some rent?

But you didnt answer, what other savings and investments do you have? You need a cash emergency pot for sure.