start saving for house or save more by opting out of pension?

[alwayswingingit]

I am 31 and I would like to buy a house in the future.

Does it make sense to focus all my energy over the next few years in to saving for a property, I would be able to save around £400 a month if I wasn't in a pension scheme at work, however if I auto enrol in to the pension then I'd be saving around 250 -300.

Just want to get advice on whether it is better to save whilst in a pension, or focus on saving for a house first and then joining the pension scheme after.

Any advice would be appreciated.

How much more could you save if you opt out ( bare in mind if you are noted as paying in circa £300 a month your pay may only increase by around £200 as you then pay tax and NI on your additional earnings- assuming basic rate tax payer). What about your employer? How much do they contribute to your pension scheme? Also given your age what about s lifetime ISA ( government tops it up by 25% and it can be used for first property or pension). I personally would be reluctant to leave a well supported employer pension scheme ( but it depends on the scheme).

My soon to be employer will pay 18% of my salary and I will pay 8%

I've never heard of lifetime ISAs, so I'll research in to that as well. Thank you

Pay the minimum into the pension. Those are quite big percentages, check if there's any flexibility. But starting a pension early is really important. It is very hard to catch up if you don't start saving till your 40s. Using a lifetime isa as pp mentioned will be a big help towards the mortgage.

18% is a HUGE employee contribution. I think I'd be inclined to pay the minimum you can, can you adjust down the %.

That size of pension sounds amazing.
I would bite their hand off.
I get 5%

I opted to keep paying it while I saved for my house deposit.
I cut down loads on groceries and other things I could cut down on - going to the cinema, buying clothes etc.

With the addition of the employer contributions and tax relief your pension savings will be worth so much more to you over the long term.

I would check your figures. 18% sounds too good to be true. The majority of employers will pay 5%.

Is it one of those pension schemes where the employee contributes more if you do!

Where I work, the employee will contribute up to 18% but that is if you are saving a large %.

I save 3.5% each month and my employer puts in 8%.

@Parky04 it is pretty much the same as what my employer contributes. Think it is fairly standard in the public sector.

I'd drop your pension contribution slightly and do both.

I’d say cut everything else down to the bones. We had two frugal years and I’m really glad we did. But your employer contributions are so good that it doesn’t make sense to miss out on them.

My soon to be employer will pay 18% of my salary and I will pay 8%

Gosh! Take the 18%
Save into a lifetime ISA too

Do they still have those first time housebuyer saving accounts where the govt adds to your savings?

I wouldn’t leave the pension, you’d regret it down the line. Saving £300 a month is still good. How much would you need for a deposit? Can you reduce outgoings anywhere else? Swap to cheaper own brand foods? Shop in Aldi? Take a packed lunch to work?

Don’t opt out of the pension! Long term you will need that.

I’d pay the min I needed into pension in order to get the 18% employer contribution, that’s amazing! Cut down everywhere else, literally move the money you’d spend on daily fripperies (eg coffee) into savings account at the end of each week, plus move a chunk as soon as you get paid.

18% employer contribution is great (also remember that is NI and tax relieved). I would stick in that scheme.

Pay in to a pension, people always find it hard to plan way ahead and do just tend to think about when they are post 65.

When I was 48 I almost died and was retired through ill health, my pension scheme paid out.I got the equivalent of three years wages tax free and also a decent pension.

First off write done absolutely ever outgoing you have. Then scruitinise where any saving can be made. Plenty of people are actually poor and can never save but plenty of people could of needed cut a lot of corners.

Go to to moneysavingexpert.com for advice.

That employer contribution is huge, you really don't want to miss out on that. So pay the minimum you need to pay to the pension to get the employer contribution, which you say is 8%.
Then put the remainder into savings targeted towards a house to be used as your primary residence.
What size deposit would you go for to get a home? Think about that and then work out how long it will take to get that. The length of time that takes will then help determine where that money is put - Look at LISA but be aware that there are not that many providers. Also look at spreading it between LISA and an interest paying current account, with the aim of getting the Government topup for the LISA and maximising interest on the remainder.

Make sure your general finances are in good shape - no debts such as car loan/lease. No debt build up on credit card (but you may want to use one for small things and pay it off so you have a credit history).

OMG your employer is going to pay in 18% if you pay in 8? Fuck me take that take that take that. You have no idea how amazing that is.

That is much better than saving an extra £100 towards a house a month.

18% is huge!!!!! Def take that over anything else. Max is ever heard of before now was 8%. Can I come work with you? I get 5% paid by employer

I just checked, I get 13.5 % paid by my employer. I contribute 6.5%.

Thank you everyone for your replies.

@Parky04 it is definitely 18% contribution, I work in a university, so maybe it is standard for universities?

Seems like opting out would be a not so good thing to do. @NicoAndTheNiners thank you for your suggestions, I am already in love with Lidl (esp their croissants!) but I can look in to making further cuts elsewhere.

Thanks for all the advice and suggestions, I really appreciate it.

I totally agree. It's easy to visualise the benefit of a pension when you are still young. You assume you'll work until you're 6, if not later so you have plenty of time. The reality is as things currently are, unless you are doing a relaxed stress free job or PT, most people in their 50s are knackered and can't wait to retire.

Thankfully, DH and I just paid into our pensions without much thinking. We pay A LOT but the rewards are great. We will be able to retire early and still do very well with a lump sum that will pay the rest of the mortgage.

It is frustrating to save to become first time buyer but do try to see where else you can save or increase your income before considering reducing your pension contributions.

Any idea if a Help to Buy ISA would be better than a LISA?

@swingofthings thank you