Wednesday, 8 August 2012

Pension Dilemma!


 Mrs M was having a job dilemma yesterday, today I'm having a pension one!

My pension costs me a small fortune each month, it was 11% of my income, has increased by 1% and will go up by another 2 % within 2 years.

We are undergoing huge pension reforms as are many State sector workers, all the while employer contributions are decreasing and retirement age is getting further and further away.

My dilemma is this: Do I stay in the pension scheme I signed up for, knowing I don't want to do my full term in the job ( I'm hoping to  foster) and knowing that I won't be able to claim it until I'm 67 anyway.

 Or do I come out of it  and over pay my mortgage?

Overpaying would save you
£46,994 in interest alone,
and mean you pay it off in full
8 years and 7 months earlier.

My pension is vastly reduced due to paying lower payments whilst I was part-time working and is never going to be  a "full" pension like my husbands. I do worry it will leave me pensionless should anything happen between us, it isn't likely to but it  doesn't pay to be complacent.

Over-paying my pension payments and debt free amounts would lead to Mortgage freedom quicker and we could then plough cash into high interest savings which I know aren't as good as a pension but would be in our  control as opposed to our employers?

Does anyone have any suggestions/advice?

I've been waiting to use  this for ages!!!


  1. Oh lord - I'm in exactly the same pickle! I look forward to hearing what you decide to do. Jx

  2. What is your position regarding your state pension?
    if you are in a union, ask if they will give you a free, impartial financial advisor. i had a really helpful visit from one of them and he demonstrated that I was better off putting my extra pension contributions-which I paid cos I only work part time- into the mortgage [but I have only 3 yrs to go till I can get my small teachers pension ] Hope youget sorted. blessings xx

  3. Jan, Mr M is on nights at mo and not best receptive so I'm waiting til the weekend when I can present him with the figures! I feel that the small return I will get pension wise could be countered by the huge reduction in mortgage x

  4. Oh, that's a tricksy one...I think of pensions as a bit of a 'dark art'. I don't really understand them but I know I've got to have one (I'm too scared not to, in fact I have two!). I think more people are choosing not to have one these days but that isn't a valid reason to pull out of yours.

    I'd love to hear what you decide.


  5. Hey, have you finally settled your dilemma? I think, if you are capable, overpaying your mortgage will work out. The primary reason why homeowners are doing this now is to be free of their payment responsibilities earlier. Yes, it feels like some kind of a prison. Once you get rid of that big debt fast, you can make use of the money you allotted for the mortgage payment for other expenses. ;)


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