AVC vs Student Loan Payment

Lyndsey_Lou

I'm 26 nad have a pretty lousy group personal pension through my work. My employer pays 3% of my salary and I also pay 3%.
I owe about £9k to the student loan company, but don't earn enough to have to pay it back (£20K in salary and bonus)
Is it beeter for me to pay spare cash as an AVC into my pension, or to pay off the loan before thinking more about the pension?

surfcat

I'm not sure what you mean about 20K not being enough to pay back the student loan? Is that including or excluding your bonus? Student loans are repaid once you earn more than 15K gross. So you should be paying 9% x 5K = £450/year.

It's a good idea to pay as much as possible into the pension, especially if the employer tops it up.

Paying back the SL is a no-brainer. Put the money you would have paid back into a 5% savings (if you can find one!), and if you get enough in there the interest you earn per month will exceed the interest added to your student loan. (SL is 2.6% at the mo, rising to 3.2% in September).

Lyndsey_Lou

Thanks! I have an old style student loan (not the kind that come off through your PAYE) so I have deferred my repayments. The bumf from the SLC says that you don't have to repay until you're paid in the region of £1800 per month gross from what I remember.
Pension it is then - just with the employer would match my contribution :mad: