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The general advice seems to be that you shouldn’t look to accelerate repayment of a student loan however I’m down to the last £5k ish and will repay it all off in the next handful of years.
I’m in the fortunate position I could withdraw the money from an ISA and repay, in full, this month.
If my maths is correct the ~£140 I pay just now - if paid that into a SIPP instead would turn into just shy of £200 a month after Ms Reeves gives me my tax back.
This feels like once compounded out over the next 17 years ‘till I can access the SIPP, this is likely to be a better return than leaving the money in a SS ISA.
Bar the lost opportunity cost of having access to the money in the ISA should I need it, what else am I missing / overlooking?
ta
Godsucking pixel phone lost my first reply....
And my second one... ****ing bastardvthing.
Check if your employer adds ENI onto AVCs....
Salary sacrifice AVCs result in about 16% more than if I did SIPP
My workplace pension is tied to state retirement age wanting to build up a SIPP pot for earlier access that 68…
"The general advice seems to be that you shouldn’t look to accelerate repayment of a student loan "
I believe that is based on the fact that many or most won't pay it off. So extra payments are just lost. If you are paying it off anyway it should be simple to calculate the interest you will save by paying early. Then calculate if that £5k you use to pay it off would generate more or less cash invested elsewhere.
I believe that is based on the fact that many or most won't pay it off. So extra payments are just lost.
Yes - this, and the fact that if you lose your job, no bailiffs are going to come knocking for the student debt, and you might wish you still had that money kicking around to cover your mortgage. But this probably doesn't really apply to OP at this stage either.
There's the psychological relief of having one less debt to worry about so I don't think there's really a right or wrong answer in this particular scenario.
Then there's the pure maths logical solution of working out the interest on the debt vs interest or gains investing the spare cash instead.
It looks to me like you can take your peoples pension before 10 years before pension age (68), like any other pension:
If you do go for increased pension contributions there’s a good chance you get the best deal by doing salary sacrifice will give you the best deal, especially if is above they add employer NI for as some do.
try to do gross contributions, not relief at source to avoid having to claim tax back.
as for paying off your loan - most advice about avoiding overpayment is aimed at those who might never pay off the loan
as for taking money out of isas to pay it - it depends on what the student loan rate is compared to what isa rate you’re getting.
id be tempted to pay off the loan and go for more salary sacrifice into the pensions, but without knowing all the figures (& context) it’s hard to be definitive
Totally agree with everything sockpuppet put above.
Also:
My workplace pension is tied to state retirement age wanting to build up a SIPP pot for earlier access that 68…
Good point, but can you transfer part of it out into a SIPP? That's my approach, pocket the 16% and then shift it somewhere with half decent returns....