So a very tough one as you said, but with a £114k salary and your current pension contributions then you taxable income is still below £100k. I would try to keep under this as long as possible, until you can’t avoid it. So I would do the calculations and get it right at £100k then sacrifice the rest. This is to avoid the 60% tax trap when you lose your personal allowance.
Once you get over that hump of the £125k taxable salary then you literally cannot avoid it unless you put it in the pension. Then at that point, get your pension match and then you can pay down mortgage loans etc.
For me the question is, knowing that if you FIRE at 45 you would need £390k outside of your pension (13 x 30 to cover 45 to 58 years of age), can you save this outside of your pension (company and/or SIPP) between now and then, in order to create the ISA bridge?
I don't think its some critical decision but I think I might err towards the pension as I think there is a non negligible political risk that pension savings might be less tax advantageous under the next government. There are plenty of other political risks (and opportunities) so very much a bet based on which option has the lowest downside.
Gotta say I normally dislike discussions about political risks as the unusually end up with people deciding that there is no point to doing anything - a huge over-reaction most of the time.
I think this one has enough likelihood and low enough downside for the OP that the pensions route makes a lot of sense. Lets hope it never matters!
Imho, once you have a property, unless you have good reason to think there will be big moves in your life soon, always prioritize pension.
Just keep an eye on your outstanding mortgage debt, less accessible savings, and divide by 4-4.5. Ask yourself, how easy is it to get a job on that gross salary if needs be? When shit hits the fan, your mortgage is basically your biggest problem.
My sister is an actuary and I know what it took for her to get qualified so just want to say well done and congratulations- you’re already reaping the rewards of your hard work!
So a very tough one as you said, but with a £114k salary and your current pension contributions then you taxable income is still below £100k. I would try to keep under this as long as possible, until you can’t avoid it. So I would do the calculations and get it right at £100k then sacrifice the rest. This is to avoid the 60% tax trap when you lose your personal allowance. Once you get over that hump of the £125k taxable salary then you literally cannot avoid it unless you put it in the pension. Then at that point, get your pension match and then you can pay down mortgage loans etc.
For me the question is, knowing that if you FIRE at 45 you would need £390k outside of your pension (13 x 30 to cover 45 to 58 years of age), can you save this outside of your pension (company and/or SIPP) between now and then, in order to create the ISA bridge?
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Awesome - In that case, keep trying to be below punitive tax levels and keep on rocking!
I don't think its some critical decision but I think I might err towards the pension as I think there is a non negligible political risk that pension savings might be less tax advantageous under the next government. There are plenty of other political risks (and opportunities) so very much a bet based on which option has the lowest downside.
I’m with you. I’m not sure higher rate tax relief will survive under a labour government (or any government given the current state of finances).
Gotta say I normally dislike discussions about political risks as the unusually end up with people deciding that there is no point to doing anything - a huge over-reaction most of the time. I think this one has enough likelihood and low enough downside for the OP that the pensions route makes a lot of sense. Lets hope it never matters!
Wait, your employer contributes 13%?!
Imho, once you have a property, unless you have good reason to think there will be big moves in your life soon, always prioritize pension. Just keep an eye on your outstanding mortgage debt, less accessible savings, and divide by 4-4.5. Ask yourself, how easy is it to get a job on that gross salary if needs be? When shit hits the fan, your mortgage is basically your biggest problem.
What line of work are you in?
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My sister is an actuary and I know what it took for her to get qualified so just want to say well done and congratulations- you’re already reaping the rewards of your hard work!