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    • vart400
    • By vart400 19th May 17, 9:46 PM
    • 84Posts
    • 142Thanks
    vart400
    Auto-enrolled in workplace pension percentage question
    • #1
    • 19th May 17, 9:46 PM
    Auto-enrolled in workplace pension percentage question 19th May 17 at 9:46 PM
    I've been auto-enrolled in the workplace pension. After originally thinking about cancelling in I came to my senses and will continue paying in. I'm 33, work in the public sector and this is my 1st pension.

    However the percentage that I'm paying in seems a far bit higher than the minimum. On my payslip it says "LGPS Office (5.80%)". It came as a bit of a shock as I was expecting something like 3-4%. Could it be that my employer is putting it high so that people will cancel? How do I go about lowering the % and would you recommend it?

    Sorry for all the probably silly questions. I didn't receive any paperwork explaining how all this works, only a general works email explaining who to contact to cancel.
Page 1
    • AnotherJoe
    • By AnotherJoe 19th May 17, 10:05 PM
    • 6,295 Posts
    • 6,657 Thanks
    AnotherJoe
    • #2
    • 19th May 17, 10:05 PM
    • #2
    • 19th May 17, 10:05 PM
    It will be a statutory amount, not one conspiratorially set to make people unsubscribe (except the financially clueless). I very much doubt you can lower it and even if you could I'd strongly recommend you dont.

    To put it in context, at just under 6%, the benefits you get will be worth what you'd need to put 2x or even 3x that percentage into a private pension, eg if you worked for Acme Ltd, you might need to put 15% in to get the same. Plus its guaranteed, which a private pension isn't.

    FWIW, "the minimum" by which I take it you mean what people enrolled in private employers schemes like Nest and so on pay at present , 1%, is a pathetic amount that will pay a pathetic pension when those people retire. There's no mystery, the more you save the more you get.
    • greenglide
    • By greenglide 19th May 17, 11:20 PM
    • 2,628 Posts
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    greenglide
    • #3
    • 19th May 17, 11:20 PM
    • #3
    • 19th May 17, 11:20 PM
    So you work in local government and are in the LGPS?

    LGPS is a "proper" pension scheme which pays out proper pensions, even if it isn't as good as it used to be.

    It is not an "auto enrollement" scheme, the employer pays vastly more than the 1% that an auto enrollment scheme would have them paying.

    You will get tax relief on the contributions so you won't pay the full amount.

    If you should decide to opt out you will also lose other valuable benefits as well.
    • vart400
    • By vart400 19th May 17, 11:44 PM
    • 84 Posts
    • 142 Thanks
    vart400
    • #4
    • 19th May 17, 11:44 PM
    • #4
    • 19th May 17, 11:44 PM
    Thanks for the replies. I didn't realise it was a 'proper' pension. The email said "auto enrolled" so I just assumed it was that. On my payslip it has my employers (secondary school) contributions and its 2.5x what I put in.
    • PeacefulWaters
    • By PeacefulWaters 20th May 17, 6:16 AM
    • 6,199 Posts
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    PeacefulWaters
    • #5
    • 20th May 17, 6:16 AM
    • #5
    • 20th May 17, 6:16 AM
    Thanks for the replies. I didn't realise it was a 'proper' pension. The email said "auto enrolled" so I just assumed it was that. On my payslip it has my employers (secondary school) contributions and its 2.5x what I put in.
    Originally posted by vart400


    Will they match at the same rate if you put even more in?
    • xylophone
    • By xylophone 20th May 17, 7:23 AM
    • 21,273 Posts
    • 12,214 Thanks
    xylophone
    • #6
    • 20th May 17, 7:23 AM
    • #6
    • 20th May 17, 7:23 AM
    https://www.eversheds-sutherland.com/documents/services/employment/auto-enrol-lgps-employers-admission-bodies.pdf

    http://www.lgpslibrary.org/assets/gas/uk/AEBv6.1c.pdf
    • bigadaj
    • By bigadaj 20th May 17, 7:24 AM
    • 8,926 Posts
    • 5,665 Thanks
    bigadaj
    • #7
    • 20th May 17, 7:24 AM
    • #7
    • 20th May 17, 7:24 AM
    Thanks for the replies. I didn't realise it was a 'proper' pension. The email said "auto enrolled" so I just assumed it was that. On my payslip it has my employers (secondary school) contributions and its 2.5x what I put in.
    Originally posted by vart400
    So for less than 6% contribution you're getting an employer contribution of over 14%, not many opportunities to do better than that in any pension scheme. And that's only an estimate as they are guaranteeing you a future benefit pretty much fixed in stone, many would argue their contribution might be worth closer to 20% in objective assessment.
    • johndough
    • By johndough 20th May 17, 8:58 AM
    • 587 Posts
    • 226 Thanks
    johndough
    • #8
    • 20th May 17, 8:58 AM
    • #8
    • 20th May 17, 8:58 AM
    Hi

    I probably shouldn't say this...

    LGPS is now Auto-Enrollment (a good thing unless you administrate the nightmare).

    There is a 50/50 option (not really a good thing) but better than nothing.

    The 5.8% is set and with tax relief is perhaps more like 4.7%.

    AAND it's "free money" when you retire, along with 'death benefits' 'ill-health cover' and a coupla other things.

    You get roughly 2% of your pay as a pension when you retire for each year you pay in.

    1 year you pay in 1160 gross (930 nett) of 20K. 2% is 400, so you may think that after 3 years of pension payout it's free money (and it almost certainly is).

    IF the payout term is a minimum of 10 years then you get 4000 guaranteed, which beats any kind of savings plan I know about.

    OH yeah and the money you and the employer put in is invested 'til the day it's wanted, which is a third lot of money to fund this EXCELLENT scheme, in my very biased view.
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