[Closed] Pensions. What is the 'bench-mark' nowadays?

Think for mine, I'm putting in 8% into dc and 2% into AVCs then the company puts in 16% for 4 years then reverts to matching. They've just changed the policy last year and according to our old timers and pension experts, they are screwing everyone. One of our finance heads of has always said, max out your pension, old you will thank you for it.

"the pension contributions look relatively good – being if I choose to sacrifice 3% the employer contributes 20% of base salary."

assuming your still in oil - thats a good set up.

We used to be employee 6% - employer 10%

its 6% each way now.

The private sector average is around 6% employer contribution

that's a very good pension.
typical employer contribution is 5-10%; 10-15% is good; more than that and you're lucky or very senior; most companies require an employee contribution with 1-2x matching up to a max of maybe 10-15%.

I put 7% into my last one, company propped it up with 11%. At board level you could put in anything up to 18% and the company would go to 27%. That's mahoosive IMO.

Matched up to 7% here so that's a great deal.

My company is 3-5% employee (you choose), 13% company. Ive been maxing it out the last 5 years as I know fine well it'll come to an end once they can justify it.

I can put more in, which I'm seriously considering, but can't decide if the work pension is the best place or a cash LISA (guaranteed 25% return until I turn 50)

employer matches up to 12%, so I'm paying and receiving the max. Financial services.

If they'll contribute 20%, that's an excellent deal. So much so it slightly sets off my 'too good to be true' spider sense, so worth double checking that the 20% is not the total contribution, i.e yours plus theirs.

If it's not, it's all definitely them, then happy days. I'd also think about sacrificing more than 3% yourself if you can afford it.

Employee matches up to 6% here I think so your deal is very good indeed.

As above - that is really good at the moment!
Mine is 10.5% employer, 8% employee which isn't too bad but is considerably worse than our old (now closed scheme). Drops to 7.5% employer in March... Grr.

Must pay in 2.5% to get 10%. Sliding scale based on age - goes up to 13% after 51st birthday.

10% based on reference salary capped at £150k
2.5% is based on total salary.

Salary cap doesn't affect me, but might affect others as I work for a bank

I pay in 6%.

20% sounds awesome. Assuming the plan isn't run by Phillip Green.

I put in 5% and the company contribution is 10%

being if I choose to sacrifice 3% the employer contributes 20% of base salary.

Bite hand off if the rest of the package is good, that is better than I left Sellafield on a few years back.

Ours used to be employer would double what employee put in upto 4% and 8%. Now for new starts they just match upto 6% and 6%. Both are garbage really as combined they don't even meet the minumum recommended amount to save.

Our group pension fund has dropped 4% over the course of this year, it's one we just recently switched to as well.

Overall fairly pish.

Out of interest of the self employed / contractor types, I wonder what they do.

It's tricky to work it out as a percentage for comparison as I'd have to work out roughly what my take home equates to if I was full time employed, plus it varies what I take home.

My company pays the lot though and as a percentage seems a bit low compared to some of these here.

Then again a small percentage of a high salary could still be more than a high percentage of a small. I suppose it depends what you want and what you need to retire on (which I have no idea really, other than all estimates from my pension pots and possible pension via annuities, is it's a massive drop in income).

I know there are tax, NI and other implications but the only things to consider are: 1) It's good to have the biggest pension pot you can have (as long as it's in a safe place) and 2) Just consider the overall package in terms of net income and total pension contributions. Never mind the relative percentages.

but the only things to consider are: 1) It’s good to have the biggest pension pot you can have (as long as it’s in a safe place) and 2) Just consider the overall package in terms of net income and total pension contributions. Never mind the relative percentages.

I have done this by staying in my current job for 28+ years paying more than I could afford at times during that time yet many on here seem to have a hatred for what I signed up to all those years ago. ho hum 😕

INRAT but remember it is 3% of gross and depending on marginal tax rate may be as low as 1.8% net. People complain about company pensions but in this case you are investing 1.8% of your net salary to get a 23% investment. They may manage it poorly but they would have to be criminally incompetent to make that a bad offer.
At that rate I would be investing money elsewhere as well.

My previous was work paid 3% and matched up to additional 4%, I did the minimum term on that and just made into the final salary/retire at 60 pension before they stopped it. My contributions rocketed as a result but still worth it (as long as I see out the next 20 odd years ok and they don't stop it 😁)

Technically public sector so was going to say no chance of them going bust, but with the 'B' word, who knows?

The OP's deal seems really good

I get 8% employer contribution on top of a 5% employee contribution, which I thought at the time was reasonably generous. (I could have taken a 6% and 3% scheme, but was lucky enough to be able to afford the initial 5% myself). Reading about some of the schemes above, now I'm not so sure it's that generous after all. Having just survived a (yet another) round of redundancies, I think it's time to put some more AVCs into the pension pot, and hopefully make it through to the next round, then jack with them.

7% employee 7% employer at my place. I think it goes up a bit the further up the tree you go.
It's not great but better than some and with 40% tax relief is a no brainer really.

i'm public sector and get 11% employer contribution against 6.5% from me.
Mrs Doris (private sector) is 5% and 5%.

s'funny, i thought i was a lucky public sector git - am genuinely surprised that there are employers out there who pitch in 20%!

We are 4% employee and 6% employer going up to 5% /10% next year and I thought that was good! I set up a pension scheme for my previous company and the pensions company I used to advise suggested that anything over 10-12% employer contribution was very generous.

Sliding scale up to 7% employee to get 9.5% employer here.

I put in a bit more to make it a nice round 20% overall. Thinking about upping that a little as I still have all of last years pay from when I was a contractor in the bank. Worked out more tax efficient to take a large dividend last year and hike up my contributions from PAYE this year.

I'm at Arup, engineering consultancy, and they double what I put in up to a maximum of 6/12%. I top up on top of that.

Some very generous company contributions rates here.

Until my current job the best I had was matched up to 5%. Current - soon to be ex - job is 6% me, 9% employer. New job will be 6%/10%.

I started work (properly) in 2001 - my first employer didn’t even offer a pension scheme (until it was obliged to offer a stakeholder scheme). I was earning too little to justify contributing and contributions were patchy in jobs after that - 40 something me doesn’t thank the younger me for choosing a larger mortgage over saving properly for the future....

Out of interest of the self employed / contractor types, I wonder what they do.

Personally, the equivalent of about a week's billing per month goes from the LtdCo into my pension.

Work for a university I put in 8% and they contribute 18%. All about to change for me as I'm going to work for an agency which will probably be rubbish pension wise ( although the upside is they do unlimited value cycle to work scheme!)

Company matches up to 7%, I pay in 20% via salary sacrifice and then get another 3% back in employers NI contribution, making it 30% all in.

Don’t forget the potential “taper” on what you can put into a pension these days. You’d have to be earning a fair whack to be affected this year, but watch for it changing in future years (you used to be able to put loads in, but at the far end of the taper you can now only put £10k per year in tax free). Max your current and previous year’s allowances if you can..

Personally, the equivalent of about a week’s billing per month goes from the LtdCo into my pension.

Billing before VAT (or you're not VAT registered)?

Either way that's a fair bit more than I'm doing. Problem with increasing it is each time I look at the pension predictions it seems the whole thing is a waste anyway.

Billing before VAT.

Why/how could saving more than you are currently be a waste? Surely more money in retirement is a good thing, right?

Problem with increasing it is each time I look at the pension predictions it seems the whole thing is a waste anyway.

That's one of the reasons I don't put any into a traditional pension. As a self employed person with no one matching contributions I was not especially impressed with the numbers. Mine is now in property and S&S ISAs. Couple of extra plusses are that the property is making a return right now as well as any capital growth and it's all moderately accessable rather than locked away so it's my rainy day fund and emergency money too. Means I'm willing to put a bit more in as I know I should be able to get it back.

3-6 here 🙁

'Surely more money in retirement is a good thing, right?'

asssuming you make it

assuming that it in full goes to your dependants if you dont make it

assuming the gov doesnt raid the pot.

all eggs in one basket is never a good idea.

I'm in financial sector, it's me 3% employer 20% though they will match up to a further 3% - so I'm on 6%/23%. That's far, far better than anything I've had from previous employers. Plus share purchase/matching scheme.

All well and good, but since inflation and interest rates have been very low for some time there isn't as much growth as I might have liked and the share price is currently in the gutter. Ah well, I'll have a roof over my head and food on the table, so no point whining.

Teacher.
Me 8.2%
Employer 14.9%

“Mine is now in property and S&S ISAs”

You don’t see the point in pensions but use a S&S ISA? What’s the difference in your investments between the two? The pension is the (tax efficient) wrapper around your investments. And can be identical investments to your ISA’s.

If you’re a 40% tax payer and don’t need the money immeadiately, pension is a no brainer.
For a basic rate tax payer I can understand the desire to stick with the liquidity / accessibility of an ISA.

My pension pot is worth more than twice what I paid in to it (inc all tax back), so it has definitely been a worthwhile investment so far.

You don’t see the point in pensions but use a S&S ISA? What’s the difference in your investments between the two? The pension is the (tax efficient) wrapper around your investments. And can be identical investments to your ISA’s.

The answer is here:

If you’re a 40% tax payer and don’t need the money immeadiately, pension is a no brainer.

How do I know if I need the money. I'm properly self employed not a disguised employee so I often go for periods without pay or knowing when I'll get paid so its my rainy day fund and I do have to dip into it occasionally. Can't do that with a pension. I'm also not a 40% tax payer (I know, one of the few on here) so the tax benefits are vastly reduced. Can't say I'm doing it right, just doing my own thing but its going to plan so far. Maybe I could've made more in a pension but I know if it was locked away I really couldn't afford to invest as much as I have done.

Can we throw that 40% tax payer quoteback in when it comes round to damning teachers and what a great deal they have.

You don’t see the point in pensions but use a S&S ISA? What’s the difference in your investments between the two? The pension is the (tax efficient) wrapper around your investments. And can be identical investments to your ISA’s.

Most folk I speak at my work have not read the t &c and just see the tax benefits.

Look at what your spouse and your dependants get back(on your pensions t+c) if you pop your clogs prior to you getting your pension.

Morbid but oft overlooked.

Another advantage of a pension is (unlike an isa) it can't be taken off you if you go bankrupt. The tax benefits for 20% tax payers exist, but are limited because you're liable for tax when you draw the pension - half the tax free allowance will be taken by the state pension, so you're only getting benefit on £5k per year approx. Same if you're a 40% tax payer saving a huge pension (limit is just over £1m at the moment - sounds like a lot but it's 30k per annum) there are limits to the benefits and you'd be paying 20% tax on most of it

Slab you are right as is the consideration that pensions accrued are not counted in benifits assessment prior to retirement.

It's swings and round abouts based on your personal risk and pension t+c but blindly saying you'd be stupid not to for the tax benifits is foolish.

I get 5% me 5% them which I was told was good by the guy who came in to explain, clearly it's absolutely shocking. Might as well not bother really it's obvious at best I'll be using food banks at worst doesn't bare thinking about.

Still take what you can whilst you can as you never know what's around the corner.

Why/how could saving more than you are currently be a waste? Surely more money in retirement is a good thing, right?

Private pension and it's in funds that carry risk. It's one where you state your attitude to risk. More risk the better return potentially but the could lose it. Less risk, rubbish return and the money is locked up anyway.

More than that though is money alone in a pot isn't necessarily going to give you a decent regular income depending how long you live, so the money goes to buying annuities but estimates I've looked at show terrible annual income. Adding a lot more money wasn't giving me much more income from the estimates.

8% personal / 14% employer contributions

so the money goes to buying annuities but estimates I’ve looked at show terrible annual income.

You don't have to buy an annuity, it's just one of the options.

I get 5% me 5% them which I was told was good by the guy who came in to explain, clearly it’s absolutely shocking.

It's really not. Shocking is 1% ( or have they moved the minimum up to 2%yet)
5% isn't amazing but its by no means bad. Some of the numbers in the thread above are very, very good so keep it in context.

Personal-3% Company-27%