Company pension plan - good deal?

Jebrelli

Hi all,

I'm in my mid-twenties and had a bit of a lightbulb moment at the weekend - I'm hopefully completing on the purchase of a flat with my partner in a few weeks, and suddenly released that I needed to get around to sorting out wills, life insurance, and a pension.

I've read some of the useful info on these boards about where to start with pensions - namely checking first if my company has a pension plan, and if it pays into the pension. I've been looking into this today and would appreciate some advice on whether my company's plan is worth signing up to:

- plan is administered by Fidelity, I would choose where the funds are invested
- company matches your contributions from 3-6%
- after 3 years with the company (I've been here 2.5), you can join a better pension plan that means the company contributions double (i.e. 10% if you pay 5%)
- you can transfer a personal pension, stakeholder plan or retirement annuity policy into the company pension account

Apologies if I've missed out any of the important information! So how does that plan sound?

edinburgher

Up to 6% match doesn't sound wildly generous, but as you've been there for 2.5 years and you haven't signed up yet - why don't you like free money?

As well as your 6% being doubled to 12%, it's actually easier on your pocket than that, as you will get tax relief and will actually pay less than 6% overall.

Get signed up straight away, contribute as much as you need to get the maximum employer match. When they double your contributions after the 3 years, is there a cap as to how much they will contribute?

Also, do you get to select from a pre-determined list of Fidelity funds? I use Fidelity for S&S ISAs and have to say that I've found them to be pretty good in terms of queries and further information etc.

Congrats for getting your ducks in a row. I'm in my mid (ok, late) 20s and sorting out my pension a few years back is definitely not something I've ever regretted! It grows faster than you'd think and time is on your side

McKneff

Grab the company pension scheme with both hands. Its free money every month, if your boss said Ill give you £50 (say) every month
if you want me to, now youre not going to turn that down are you. Join as soon as you can.

Jebrelli

edinburgher wrote: »

Get signed up straight away, contribute as much as you need to get the maximum employer match. When they double your contributions after the 3 years, is there a cap as to how much they will contribute?

Also, do you get to select from a pre-determined list of Fidelity funds? I use Fidelity for S&S ISAs and have to say that I've found them to be pretty good in terms of queries and further information etc.

The cap appears to be at 10% - too low?

Yes, I'd be selecting from a list of pre-determined funds - Fidelity's listed all of them in the document (divided into 'active' and 'passive' funds). Would you recommend any of them?

Thanks for the comments, really appreciate it.

Jebrelli

McKneff wrote: »

Grab the company pension scheme with both hands. Its free money every month, if your boss said Ill give you £50 (say) every month
if you want me to, now youre not going to turn that down are you. Join as soon as you can.

Well if you put it like that...

bilbo51

3-6% is quite a normal figure for a private sector scheme in my experience. I would say 10% is generous. Go for it!

edinburgher

Yes, I'd be selecting from a list of pre-determined funds - Fidelity's listed all of them in the document (divided into 'active' and 'passive' funds). Would you recommend any of them?

Nope, because I can't see the document

3-6% is quite a normal figure for a private sector scheme in my experience. I would say 10% is generous. Go for it!

I had the same 10% match dealy with my old private sector employer and hadn't realised it was competitive. You learn something new every day!

dunstonh

- company matches your contributions from 3-6%

FREE MONEY. Need we say more.

example. You pay £40, Govt adds £10 and company adds £50 meaning that £100 contribution has only cost you £40. Nothing else can match or beat free money.

Loughton_Monkey

Jebrelli wrote: »

Apologies if I've missed out any of the important information! So how does that plan sound?

It sounds exactly what it seems to. It's free money from your employer and the tax man. You have been throwing this into the river for the last 2½ years. Get into the scheme tomorrow.

theoretica

Get into the scheme to get the maximum from your employer. If you think 12% (rising to 15%?) of your wage going into a pension is too low you can put more in - either into that one, or into another pension, entirely your choice. The cap is only on the free money your employer will give you, not on what you put into this, or any other, pension.

Andy7856

Ditto! everyone's comments!! Grab the FREE money while you can. Fidelity have some good portfolio planning tools online to give you some IDEAS on suitable funds..

Andy