Confused: Accept or leave it . 7.5% max contribution

loveboat1234

Good afternoon , I have spend the whole week-end thinking about this and could not find the answer ( I have to give it by tomorrow ) if to join a comapany pension scheme through Norwich Union were the Employer pays max up to 7.5% and matches what I pay or to leave it and research more and invest in my own retirement plan .

I am on a good wage ( despite money never being enough here in London ) but I am worried that if I pay into my pension for 22 years and if in the near future I will need access to money then the main is hold in the pension funds and can not be touched till I am 55. As I am a single persone it would be nice to get things right ... and I know it all depends on personal circumstances and how much I can afford but any help on how to progress or where to start % would be much appreciated.

Have a nice day.

dunstonh

but I am worried that if I pay into my pension for 22 years and if in the near future I will need access to money then the main is hold in the pension funds and can not be touched till I am 55.

Retirement planning is generally considered to be putting money away for your retirement. Not to access in a couple of years to spend on other things.

and I know it all depends on personal circumstances and how much I can afford but any help on how to progress or where to start % would be much appreciated.

You should take the maximum 7.5% from the employer and match that. Remember you also get tax relief on your contribution meaning that it wont be 7.5% of your net pay. Closer to 5.85%

If you earn 25,000 that means your cost is only £121.87 pm which isnt much for retirement planning at all. However, the Govt add £34.38 and your employer adds £156.25. So, in total your own contribution of £121 is being increased to £312.50. Nothing else will come close to that.

Its free money and you should take it.

EdInvestor

Hi loveboat

What's your situation vis a vis buying a property?Generally the view is that you should take advanatge of any free money offered by an employer. Also a pension is helpful if you pay higher rate tax.

However if you feel you might need the money for a deposit on a home it may be better to use ISAs.

What's your situation on the basics - the two state pensions?

You can get a forecast here: https://www.thepensionservice.gov.uk

loveboat1234

So the message I gather is to put 7.5% and have my employer match it . Uhmmm I purchased a little 2 bed flat ( where I own only 60% ) and was thinking of maybe purchase the remaing 40% with the money saved from my pension contribution . My contribution would be around £200 a months and I could pay of the mortgage with this addional monthly contribution.

The clock is ticking and I am nowhere near a decision .... I think I will go the isa route or maybe split it ( £100 into an ISA and £100 from my site into a pension ?)

Again thanks for all your help.

Merry Merry Xmas.

EdInvestor

I think I will go the isa route or maybe split it ( £100 into an ISA and £100 from my site into a pension ?)

On the eggs in baskets principle, sounds reasonable. property with extra equity/ISA/pension is the ideal combination at retirement.

dunstonh

Just remember that the free money and tax relief means that nothing else will come close to the pension. Yes, you shouldnt leave yourself short but remember it is free money.

Charlton_Taz

I think you are mad not to get your employer matched contribution!! It is like a 100% return on your investment instantly......no other investment you make will match that!

wotsthat

So the message I gather is to put 7.5% and have my employer match it

Yes unless you enjoy giving away money.