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united-kingdom pension

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July 2, 2025 Score: 4 Rep: 30,617 Quality: Medium Completeness: 30%

So I would be paying 52% more for FA and getting slightly less than a 52% uplift in pension payout. My thoughts are that the 52% increase in initial cost is a one-off payment, whereas the slightly-less-than-52% increase in pension is an annual payout, and so I think that FA makes more sense.

This doesn't make sense to me. You could take the one-off payment for FA and use it for a one-off payment for more AP instead, and you'd end up with a higher annual payout in the end. There may be weird effects due to the fact that AP is in chunks of £250 and that you only have a limited number of options to change accrual rates with FA, but if you just work it out based on the return per £ spent now, AP comes out on top according to your information.

tax - I'm just tipping into the higher rate band by approx £2, 500. Does it make any difference?

In general paying more into your pension means the money won't be taxed now. If possible it makes sense to optimise your contributions so you make them all out of the 40% tax band by spreading them out over more time. But ultimately if you want to make bigger contributions over the coming years than you are likely to have "40% income", you can't do this. You just need to calculate the cost/reward on the basis of the lower tax savings.