Over pay mortgage or pay more into pensions?

[Purpl]

any suggestions or advice welcome to help get me in better shape. Nothing drastic please I’ve no intention of giving up my house to buy smaller outright as long as I’m fit to work.
partner 10 years older similar savings. His pension will be average.
o/s mortgage 94k 8.5 years left. Split across 3 mortgages on 1 property. Rate on 2 are 1.22% & 1 due to go to 4.37% in few months the other 2 have another 2 years till out of rate.
£135k in pensions plus 10 years of a final salary not sure wgat that’s worth but early career years.
7% employer contribution into pension due to change jobs & that’s the new rate. I add to it but not sure what yet.
currently overpay mortgage £700 a month & pay 5% additional into pension.
minimal savings £30k
possible good inheritance but depends if care home is required. Not relying on.
Young adult kids are home.
not been great with saving have had lot of bucket list family holidays and enjoyed it but taking stock & changing ways before I retire.
£30k savings.
£50k salary.
Thank you everyone

Are you married to your partner and is your name on all the mortgages?

And is the £135k pension yours or his? I’m trying to work out what is yours and if you’re in a vulnerable financial position.

Yes

The pension pot is mine. He has his own pension. Because I have always had what I thought were decent pension contributions from employers I only added in small amounts and prioritised his as he had no employer help. Paid £500 a month into his for nearly 20 years plus he had low amounts going in from age 16. I’ve been part time for years bringing up kids and dropped the ball on keeping track of my own pension.
both of our pensions have each other as named benificiries.

we have 700k equity as in south east so we can downsize when time is right.

How old are you/how long until you are planning on retiring? Your mortgage is fairly small and low interest so personally I wouldn't focus on overpaying this. I'd pile as much as you can into your pension as it should make more than the interest your mortgage charges and then when you retire you could use the tax free lump sum to pay off any remaining mortgage.

Pension gives you the best return due to the tax relief. However you need to balance that with job security and having more choice when you become mortgage free.

You have a valuable property so if you plan to move to a less expensive one or take equity release that will help you with your provision for retirement too, so you sound as though you are in an OK position either way.

1. Make sure the mortgage overpayment is against the mortgage that is due to rise in a few months. Obviously bearing in mind any overpayment cap e.g. 10%.
2. Use the mortgage overpayment calculator to work out how much you save on each mortgage. It also has a savings comparison tool. https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/
3. Spreadsheet showing all expenditure including one off costs, presents etc. This indicates what you will need when each of you retires.
4. State Pension check for each of you https://www.gov.uk/check-state-pension Make sure you are on track for full state pensions.
5. Spreadsheet of current and projected pension income. Including what the widows/widower pensions are. This can help you decide where to focus additional pension incomes.
6. As DH is older and his pension has been your focus it maybe better to start focusing on your pension.

Well it's insanity to overpay mortgages with those rates. That's like winning the lottery and burning the ticket.

At least put the money in savings instead until the rates increase.

You don't say how old you are. Which is a consideration for your pension. Also if you expect to pay tax at a lower rate in retirement than while you're working. If so, you can profit from higher tax relief going in than coming out, plus the tax free lump sum. So prioritising pensions would increase this benefit.

thank you I’m 54 and would like to retire at 60 although that might not be possible. I would be happy to work part time in a less stressful job to 67. Obviously it would be down to health too. Currently in excellent health but I’m seeing a lot of peer group getting cancer earlier and they aren’t even the people that have had a poor lifestyle.

Thank you that’s really helpful. I do have fairly good job security but the stress level of my industry are fairly high and I’m not sure I’ll want to work full time till 67. Although part time should be possible.

Thank you so much for for comprehensive reply. I will start working through the points you have made.

Leaving aside the defined benefit pension, your pension value isn't that high for your age. As you are in good health, I would definitely prioritise additional contributions to the pension. Even before and potential market gains, the tax back is higher than the interest only your mortgage.

I never really thought of it like that as saving rates been so low too for a long time. The mortgage is the biggest expense and feels like there is pressure to get rid of it & a mindset of security of owning your home. We bought a bigger house so we could enjoy it with kids growing up and hoped that the equity increase would pay off with a view to downsizing. Many peers bought a second flat to rent it or kept their original flat. I don’t regret doing that I wouldn’t have wanted the stress or worrying about bad tenants not paying etc. I’ve seen other threads about living above your means and that would include us too. I’ve tried to keep a balance but the years go by quickly & with hindsight should have saved more and addressed this earlier. That said if I drop dead tomorrow I woukd have had a good life but if I live to 90 I been a bit reckless.
ultimately we are in a privileged position compared to so many. We both fully expected the full state pension but I’m not so sure we will ever receive it. I think my generation is a ticking time bomb of poverty in old age & I want to do as much as possible now to protect against that. It’s quite worrying that some peers kept their group with above average salaries but not super high earner have barely any pension provision. My workplace pension have been generous that most but looking at the figures they haven’t performed well enough to be stand alone.

I agree with overpaying the mortgage is bonkers at those rates.

buy extra pension for the next few years and certainly as much as possible for the next couple - even forgoing ovp on mortgage to do so - you’ll get more benefits long term

I would pay the mortgage always, I don't understand the point of having debt and putting money into savings. DH and I always prioritised paying off the mortgage

Because if the government is going to effectively give you £30 for every £100 you put into a pension - it makes sense to take up that offer. Along with if savings are giving you £112 per month and paying extra off your debt only saves you £30, why would you give up £81 each month?

Check both state pensions to ensure you will get maximum.

Both get private pension forecasts.

Review pensions and put money in there if needed - all the rest you will get no tax advantages on. [I put extra in from my 20s and anything at 40% tax into my pension and in my final year working 50% of my salary - retired at 57].

Why do you not think you will get the state pension? You have worked for many years right? I wouldn’t catastrophise about that. They are not going to cancel the state pension now for people in their 50s and 60s!

I would overpay the one mortgage with the higher rate and pile money into your pension and into an ISA.

The way state pension is calculated changed in 2016. For anyone who has pre and post 2016 contributions it is worth checking just to make sure.