Pensions Newbie - HELP!

daleuk_3

Right im new to all this and starting my first career job soon. Iv read the MSE article and I think most of it has flown right over!

I have been offered a pension where the company matches my contributions. What rate should I put in the min is 3% max is 6% of £25k pa.

Since its an investment plan, i guess it is risky? what is the worst case? best case?

Are there no risk options or lower risk? and what are there draw backs?

Heres the link to the company pension:

http://www.tpasweb.co.uk/eds/financial-protection/eds-investment-plan.shtml

Any help appreciated.

david78

If the company matches your contributions then it makes sense to put in as much as you can afford up to 6% (if you put in 6% its like getting a 6% pay rise compared with people who use a personal pension with no employer contribution).

You need to look at the different funds offered by the pension provider (ask your company for the details). There will be lower risk, medium risk and higher risk funds, and probably a cash option. There is no "risk free" option though (even cash carries risk).

dunstonh

Since its an investment plan, i guess it is risky? what is the worst case? best case?

Depends on the investment funds. However, risk is also measured over time. Cash for the long term is a risk. So nothing is risk free.

A 6% contribution by you isnt actually 6%. Its actually 4.8% net of basic rate tax. Tax relief takes it up to 6%. Maxing it out to the 6% is common sense and in reality a 6% contribution isnt much for retirement provision. So should be affordable.