Company Pension Scheme Contributions

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I have just been offered a new job which offers a pension. My offer letter states : The company will pay 7% of your basic salary into an approved scheme. You may also pay into the scheme, subject to revenue guidelines.

So that I can get a heads up on the way in which contributions work in advance of receiving the full terms and conditions does anyone know if this means that -

my employer makes a contribution equivilent to 7% of my salary or is the 7% actually from my salary (in that I receive only 93% with the knock on relief on tax and NI).

It is probably blindingly obvious to you money saving experts but pensions are not my area of expertise!!

Thank you in advance.

MrChips

Almost certainly these are contributions in addition to your salary. It isn't unusual for a company to make contributions on your behalf, although often they'll only do it if you do (so called "matching").

Companies can't make joining their scheme compulsory - hence it is extremely unlikely that your potential employer is commiting you to paying your own money into this scheme.

McKneff

yes it is an extra to your salary, my company pays 10% into my pension scheme and i pay 4% which i think is the maximum, apart from AVCs.
Dont hesitate to accept it, after all its free money

MrMicawber_2

Do a quick double check but almost certainly this is money your employer contributes in addition to your salary as both MrChips and Annie say. And as Annie says it is free money.

The rule of thumb is to maximise your employers contributions and if you want to put more in a pension consider the alternatives.

I'm assuming your scheme is money purchase rather than final salary so don't assume the investment is brilliant. Try and take some interest and learn a bit but if you aren't bothered a bit of money spent on an IFA (pay a fee rather than commission - my opinion) could be money well spent.

I FEEL I NEED TO ADD A SHORT NOTE BECAUSE I HAVE WRITTEN QUITE A NUMBER OF POSTS WHERE I HAVE SUGGESTED SEEING A FEE BASED IFA. I AM NOT AN IFA AND DON'T HAVE ANY LINKS WITH ANY IFA'S - I DO THINK YOU NEED TO CHOOSE CAREFULLY BUT GOOD IFA'S ARE THE EXPERTS.