Salary sacrifice for pension

[UncappedTag]

What is the usual salary percentage sacrifice in pct terms? 2-5%? I know it is down to each individuals commitments etc, but I've usually just put £50 a month into my DC plan, but moving to a new pension provider they are asking for % terms.

Edited by UncappedTag on Monday 27th July 16:02

[Mx_Stu]

Are you asking for a guide to what people put in?

I have always worked to half your age in % terms, so for example I am 27 and I contribute 13.5% of my gross salary.

[UncappedTag]

Mx_Stu said:

Are you asking for a guide to what people put in?

I have always worked to half your age in % terms, so for example I am 27 and I contribute 13.5% of my gross salary.

As high as that!?! Do you have a mortgage etc?

[IanMorewood]

Assume it’s a group personal pension then the scheme will be set up with a fixed percentage across a certain work group (i.e. all sales staff put in 6% of basic pay, all management staff 8% of total paye etc). the scheme booklet should tell you.

[IanMorewood]

UncappedTag said:

Mx_Stu said:

Are you asking for a guide to what people put in?

I have always worked to half your age in % terms, so for example I am 27 and I contribute 13.5% of my gross salary.

As high as that!?! Do you have a mortgage etc?

Probably not but he fancies stopping work at some point and being able to live off his pension.

[esselte]

IanMorewood said:

UncappedTag said:

Mx_Stu said:

Are you asking for a guide to what people put in?

I have always worked to half your age in % terms, so for example I am 27 and I contribute 13.5% of my gross salary.

As high as that!?! Do you have a mortgage etc?

Probably not but he fancies stopping work at some point and being able to live off his pension.

He'll need to put more than that in then...

[Mx_Stu]

IanMorewood said:

UncappedTag said:

Mx_Stu said:

Are you asking for a guide to what people put in?

I have always worked to half your age in % terms, so for example I am 27 and I contribute 13.5% of my gross salary.

As high as that!?! Do you have a mortgage etc?

Probably not but he fancies stopping work at some point and being able to live off his pension.

I do have a mortgage, only 28 years left!

Luckily I have a good employer who gave me the option, after completing my first year of service, to take a 10% pay rise or a 13% pension contribution. I took the pension contribution so each year I just elect to contribute the extra 0.5% from my gross salary.

The financial landscape has changed considerably since this article was published:

http://www.telegraph.co.uk/finance/personalfinance...

But it gives an idea of returns and a quote to backup my general rule of thumb approach:

"A good guide to follow is to aim to pay in about half your age as a percentage of your income. For example, if someone is starting their pension at the age of 20, 10 per cent - including any employer contribution - is a decent contribution to make. This would increase to 15 per cent at 30 and so on. "

Edited by Mx_Stu on Monday 27th July 16:25

[Mattt]

I put in the max matched contribution - 20% (half me, half firm).

While I'm in a stage of my life where I have a relatively high disposable income I'll save for the future, then adjust as needs dictate.

[alock]

I'm 32 with mortgage, wife and 2 kids to support off my salary. Company put in 6% and I put in another 6% of gross salary.

[Welshbeef]

I've been lucky have had 3 final salary jobs and have built up a fair number of years in each, in addition to this I have defined contribution pensions where I put in 6% which was matched by the company (I could have put in 4% but at that level they only put in 2% so I turned th screw the hardest at that 6% level).

In addition to any "pension" I put the £3.6k p.a. into a Cash ISA and have done (£3k previously) for as long as I can remember - this is untouched and unless something dire happens I will not touch this until i retire so I will have state pension £xk + final salay penions £xk + defined contribution pensions £xk + tax free Cash ISA's to take out.

The other thing is Im now currently settled in what could well be the forever home (only just moved in) and as its an offset mortgage were down to 15 years after 6 weeks in.... from a 25year term.

[UncappedTag]

Thank you for the replies. My company also contributes, so need to ascertain what the new % will be.

[northandy]

I put 0% in, but its a FS non contributory scheme.

Although I do additional AVC's which are probably about 5%

[edc]

I read the title and thought the thread would be about pension conributions on a salary sacrifice scheme ... more savings to be had there.

[Mx_Stu]

edc said:

I read the title and thought the thread would be about pension conributions on a salary sacrifice scheme ... more savings to be had there.

Thats how our contributions operate, instant tax relief and the NIC saving by the employer making the contribution rather than the employee.

[edc]

I suspect that most pensions mentioned here aren't salary sacrifice. Just dug out this quick link via Google http://www.whitingandpartners.co.uk/content/salary...

[Mx_Stu]

I used in work specifically in employment taxes and we would talk to companies about salary sacrifice for pensions. Biggest barriers to change we used to find were:

a) People are sceptical when anything is discussed about pensions as they think the company is only in it to screw over employees and save money; and

b) If there are unions involved they point blank refuse to discuss any changes to the pension scheme.

[bogwoppit]

That and companies have a habit of counting the money you save in tax as part of "their" contribution to your pension. But all things being equal definitely worth doing of course.