Contribution level

marc.faulkner

Hi,

I'm currently 20 and am contributing 7% of my basic salary to my pension, along with the 5% contributed by my employer - making a total contribution of 12%.

Is this a good contribution level for somebody my age, taking into account that I potentially have 48-50 years before I can think about retiring?

Thanks,

Marc

ffacoffipawb

marc.faulkner wrote: »

Hi,

I'm currently 20 and am contributing 7% of my basic salary to my pension, along with the 5% contributed by my employer - making a total contribution of 12%.

Is this a good contribution level for somebody my age, taking into account that I potentially have 48-50 years before I can think about retiring?

Thanks,

Marc

It's not too bad to be honest.

Assuming the fund grows at the same rate as your salary, after 50 years you will have a fund of 600% of salary which may buy a pension of 40% of salary at age 70 (assuming an annuity rate of £15 buys £1 pension).

If you were retiring now, could you live on 40% of your current salary plus a state pension of £4,500 on top plus any second state pension on top of that? Assume that any mortgage you have will have been long repaid.

If not, pay in a little more than 12%.

I am paying 50% but I am considerably older than yow.

ginvzt

I think the rule of thumb is to pay into your pension the percentage of your salary that is half your age... So, if you are 20, you should pay 10%... You have 12% coming in, which I would think is good - and you are only 20!

I know I am not paying enough, so I have my pension review in a week or so to up it up. I am nearing to 30, so should consider paying 15%. My employer contributes 6.5%, so I would need to fork out 8.5%, but it is a bit too much of a hit for me at the moment...

CLAPTON

ginvzt wrote: »

I think the rule of thumb is to pay into your pension the percentage of your salary that is half your age... So, if you are 20, you should pay 10%... You have 12% coming in, which I would think is good - and you are only 20!

I know I am not paying enough, so I have my pension review in a week or so to up it up. I am nearing to 30, so should consider paying 15%. My employer contributes 6.5%, so I would need to fork out 8.5%, but it is a bit too much of a hit for me at the moment...

the rule of thumb refers to the percentage you need to contribute based on the age you start at... so if you're 20 then it means that you should pay 10% for life... if you are now 30 then it depends when you started contributions.... but it is only a rough and ready guide.