Company pension question

cashbackproblems

Hi

I recently joined my companies pension scheme where they match your contributions by 15% (i pay in the max £140 per month) and was wondering, the money tht builds up over the yrs do you earn interest on this apart from the 15%, if you dont it would be a pretty bad deal and id be better off investing it myself.

The company they use is Pensions and Benefits service in York.

Thanks!

molerat

The money is invested not just dumped in a bank. Look at your pension scheme documents and it will show where it is invested and any choices you have over those investments.

dunstonh

id be better off investing it myself.

Not if you don't undestand the concepts of investing. When you set the pension up, you would have been asked how and where you wanted it invested. It will be subject to investment returns of where you chose.

15% employer contribution is a very good deal.

This answer assumes money purchase pensions (which it appears to be as you mention matched contributions which would not apply to defined benefit schemes).

lisyloo

If I were you I'd check what it is invested in.
You should have been consulted about this at the beginning.
You might want to consider switching the fund(s) and possibly taking advice on that.

cashbackproblems

Thanks for the replies, nope i wasnt asked about where i want it invested, everyone is automatically signed up and you can opt out if you want, regarding where they would invest however i emailed them today with all these questions so will see what they say!

I didnt think 15% sounded like much at all, but i guess with interest/growth it might be ok.

Shimrod

cashbackproblems wrote: »

I didnt think 15% sounded like much at all, but i guess with interest/growth it might be ok.

15% is very generous, and I would guess at a bank. The average company contribution to a defined contribution pension is around 6.4%

dunstonh

I didnt think 15% sounded like much at all, but i guess with interest/growth it might be ok.

You pay in £112, tax relief is added to make it £140. Company adds £140. So, your £112 has immediately turned into £280.

What else can you think that gives you an immediate return like that?
Do you want £112 in a savings account or £280 in a pension for exactly the same cost?

cashbackproblems

dunstonh wrote: »

You pay in £112, tax relief is added to make it £140. Company adds £140. So, your £112 has immediately turned into £280.

What else can you think that gives you an immediate return like that?
Do you want £112 in a savings account or £280 in a pension for exactly the same cost?

Yeh someone did say to me the total is £280 p/m, but when i read 15% i thought theyd made a mistake. How do u get that figure?

Yes its a bank/financial services, GE Capital.

dunstonh

How do u get that figure?

The employer will match your contribution up to 15%. You said your contribution was £140pm.

So, £140 from you minus tax relief is £112. That is how much your net pay is reduced.
The company match the £140. So, you get £280 going in.

Nothing beats free money.