pay into pension or mortgage?

[L&A]

Just wondering with the recent budget changes on pension, would we be better to pay off mortgage than put into pension?
I pay 250 into pension, dh 500, both pay tax at 41%.
Mortgage is 250k left with tracker 0.75% above ecb rate so good rate.
We are 39 & 35 with 2 kids.

 

[Kai123]

Me and my girlfriend are going to start to save around 800 a month to save for a mortgage in January. In two years time we could get a decent place and hopefully will not have to sell at any point in our lives.

Paying off a mortgage early is priority to us. The money we could save after would be enough to have a pension on, even after 5 or 10 years after work. I cant see myself not working so I believe a pension for us is not ideal.

I don't know if im being naive. Everyone goes on about saving for a pension early. I can see a better future paying off a mortgage early as possible and then keep on saving that money afterwards in a regular saving account.

Kai.

 

[Brendan Burgess]

Just wondering with the recent budget changes on pension, would we be better to pay off mortgage than put into pension?
I pay 250 into pension, dh 500, both pay tax at 41%.
Mortgage is 250k left with tracker 0.75% above ecb rate so good rate.
We are 39 & 35 with 2 kids.

Hi L&A

You get full tax relief on pension contributions this year, so it's worth putting in the absolute maximum this year.

From 2011, there is little point in contributing to a pension as the relief is being reduced.

So I would say to put in the max this year and then pay off your mortgage from next year on.

 

[PaddyW]

Hi L&A

You get full tax relief on pension contributions this year, so it's worth putting in the absolute maximum this year.

From 2011, there is little point in contributing to a pension as the relief is being reduced.

So I would say to put in the max this year and then pay off your mortgage from next year on.

Hi Brendan, you say it's not worth contributing from next year on, why so? I thought there was just a minor change this year for 2011 that wouldn't upset the balance too much. If what you say is true though, would I be better off paying off my ECB + 1.25% tracker also?

I realise that once they start reducing the relief from 41% down that it would make more sense to not pay into it.

Also, my employer matches my contribution so that may have a bearing on it also.

 

[mmclo]

Hi L&A

From 2011, there is little point in contributing to a pension as the relief is being reduced.

A bit previous maybe? We don't know exactly what the changes will be, even 20% relief mightn't be so bad. The presence or lack of ER contribution seems to be of growing importance.

 

[z107]

A bit previous maybe? We don't know exactly what the changes will be, even 20% relief mightn't be so bad.

Were this changes not announced in the Budget? ie - pension contributions are now liable for USC and PRSI (employee contribution)