By Jonathan Watts-Lay, Director, WEALTH at work
“When it comes to securing our financial future there are often a number of decisions that must be made. A financial dilemma that many people consider is whether to prioritise reducing their mortgage debt or whether to increase the amount they pay into their workplace pension. However, there are many considerations to be aware of.
There are many benefits to saving more into your pension, including tax relief and the benefit of long-term compound growth, especially if your employer will match your payments. Generally, if the investment growth you are likely to get is more than the interest rate on your mortgage, then it might be a better idea to pay into your pension. This is especially true if you are a higher rate tax payer, and if your employer matches additional pension contributions, but individuals should make sure that they are not likely to exceed any pension tax allowances.
On the other side of the coin, when mortgage rates were low, increasing mortgage repayments may have been less attractive than it is today. Many people are now approaching the end of fixed rate mortgage deals, so they should review any decision made previously.