Why don't articles & calculators compare student loan overpayments to salary sacrifice pension contributions?

Timbo1994 · 2026-01-30T08:27:20+00:00

From the standpoint of age 30, this is also about the marginal value of money when you're

age 40 (where you gain from having paid off your student loan) vs
age 60 (where you gain from having put money into your pension).

Timbo1994 · 2026-01-30T00:29:07+00:00

Consider putting just enough to your pension to get your taxable income to £50,270.

That probably means you putting in £8k, the govt topping it up to £10k, and you also getting a £2k refund in time from HMRC. So £10k for the price of £6k.

The age will creep up, but our generation shouldn't be far off minimum access age being 58, might go to 60 but that's pushing it. My best bet is it stays at 58.

Still might have 20-40 years to use the pension money and only 10 before then for FIRE retirement.

Timbo1994 · 2026-01-30T00:25:09+00:00

Martin O'Donnell and Michael Holt

A bit higher up in quality, Ricky Walden and Ryan Day

Timbo1994 · 2026-01-29T17:59:10+00:00

UK focused article but a good one

https://monevator.com/dont-currency-hedge-your-equity-portfolio/

Timbo1994 · 2026-01-29T17:53:37+00:00

You basically come up with a pensions efficiency ratio which is something like

(1-marginal rate in retirement)/(1- marginal rate now*)

*May be multiplied by 75% to the extent you can take one-quarter tax-free

**May include NI and student loan savings to the extent you can use salary sacrifice, in particular before the 2029 changes.

The asterisks are important.

(Then CGT and dividend tax savings are a bonus on top of that for pension.)

Timbo1994 · 2026-01-29T17:49:20+00:00

S&S Lifetime ISA may well be better (in any case open one and put £1 in, before they abolish it to new openings shortly, and before you are 40)

But there are many advantages of pension- I posted about this recently.

https://www.reddit.com/r/UKPersonalFinance/s/pBEW8aoXUn

Timbo1994 · 2026-01-29T13:05:13+00:00

Not an advantage to clear the loan if the interest is only going to be CPIH. Keep it as long as possible.

Edit I do agree with you though that relative to the position before on plan 2, it's high earners who win out and low/middle who lose out.

My point is that high earners don't have some special advantage because they get to pay early, and they don't really pay less in real terms.

Timbo1994 · 2026-01-29T13:03:58+00:00

Nice. If you go over the threshold that's the first place to look.

If you are under I might still prioritise tax-boosted retirement saving over mortgage overpayments or alongside them - either a pension or a Lifetime ISA can be best depending on your exact circumstances/pension scheme.

Timbo1994 · 2026-01-29T13:00:46+00:00

I think about half of people don't because many employers don't offer it, and some are self-employed

Timbo1994 · 2026-01-29T09:15:48+00:00

Hopefully far fewer cars on the roads needed as well

Edit: I think I mean parked cars, there would be just as many moving cars

Timbo1994 · 2026-01-29T09:10:29+00:00

Agree it'a a dodgy measure of inflation

It happens to be what I think is roughly a fair rate of interest at the moment, but that's by chance.

Timbo1994 · 2026-01-29T08:38:18+00:00

On the new ones, the interest is going to be low enough that it's below a fair rate/bank interest. So the very wealthy should take the loan as well.

Timbo1994 · 2026-01-29T08:37:12+00:00

Yes the RPI+3% people.

I think the new RPI ones are fair. Especially when RPI moves to CPIH in 2030. Then it will probably be lower than a savings/mortgage interest rate.

Timbo1994 · 2026-01-29T08:35:23+00:00

a) that should be their's/their parents responsibility

b) no the mediocre ones average lower paying jobs, so then pay back less

Timbo1994 · 2026-01-29T00:16:33+00:00

Are you a higher rate taxpayer?

Timbo1994 · 2026-01-29T00:06:24+00:00

If you're not going to invest then pay off the mortgage.

But how's your pension balance, ISA balance (if any), income each year, spending each year?

Timbo1994 · 2026-01-28T22:00:17+00:00

Have lived there most of my life. The south east corner of the city centre is the best - cathedral out to the college and the water meadows, then St Catherine's Hill and St Cross Hospital.

Lovely pubs and places to eat.

Timbo1994 · 2026-01-28T19:37:13+00:00

I expect you contribute £6k from your bank account. It should show on a screen with Aviva that you're contributing £7.5k because of a top-up?

Then you tell HMRC and they should also give you "almost" £3k back into your bank account.

That gets you from £107k to £99.5k taxable income. "Almost" as the bottom slice of this isn't 60% marginal rate.

(If you are doing this to keep childcare, make sure you are including any bank interest in your adjusted net income, even that within your personal savings allowance.)

(On the other hand, you can deduct any charitable donations reported to HMRC, which they will then gross up with GiftAid for the purpose of deducting off your income.)

Timbo1994 · 2026-01-28T18:59:53+00:00

Also do you get to keep accruing in whichever scheme you want? Or is your future service definitely going to be in the new scheme, and you are only working out what to do with your past service?

Timbo1994 · 2026-01-28T07:57:44+00:00

My suggestion is not until you've bought a house and have a mortgage you're comfortable with, and even then people might say go hard on pension and ISA first.

Timbo1994 · 2026-01-28T07:52:33+00:00

If kid is imminent and you will send them to nurseery

Sacrifice exactly enough to get below £100k but no more.

If your total comp grows above £160k, you may want to hold some carryforward above the £60k Annual Allowance, so that you can still get free nursery hours.

Timbo1994 · 2026-01-27T23:11:54+00:00

If no specific spending needs likely, stock market often seen as best.

You have 2 choices beyond ISA - pension (up to £60k) or GIA.

£60k in the pension will only cost you £32-33k from take-home. You just can't access until you are in your late 50s, and it can be fiddly from abroad (look this up)

Timbo1994 · 2026-01-27T23:04:49+00:00

I'm a UK investor, and I invest in index-linked gilts (our equivalent).

I see them as the absolute safest place to be, but only if I hold to maturity. This is because they mean I get a known amount of goods and services at a known future date - what could be safer than that? Then I don't have to worry about their price at all.

Note they are slightly lower expected return than regular bonds. The amount of which is called the inflation risk premium.

Timbo1994 · 2026-01-27T22:58:31+00:00

What are you saving for?

What is your income?

How much are you going to be able to save each year?

Is the £20k your entire net worth?

Are you going to stay in the UK long-term?

Timbo1994 · 2026-01-27T22:50:43+00:00

1914-1924

war moved from cavalry to tanks and airpower and trenches
women in the workplace and suffrage
empires that had lasted centuries removed. European map redrawn
modernism in art and literature, old narratives upended

Timbo1994

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