Extra payments in company pension

paulboy83

Hi,

First i'll apologise for being so clueless when it comes to this but I just get confused when I try to start to make any sense of it :doh:

I'm 23 and have been with my employer for 2 years now and have been paying into the pension since I joined.

The average after the company have paid in their amount is £101. I earn about £1200 a month which can vary either way by as much as £200 depending on how much work I do per month (My basic pay is rather low and is supplemented by extra pay for the hours I work). According to the website of the pension plan its invested in the default fund which in the last year has changed an amazing 0.52% :rolleyes: There are other funds on there which are up as much as 14.3% and down as much as 3%

My question is should I start saving more towards a pension? I of course do not plan to be earning a relatively low salary for the rest of my life but i'd expect to be without a major payrise for a few years as i'm happy in what i'm doing so won't be on the move unless I have to.
Also should I look at changing the fund the pension is invested into as with the one exception that is in negative figures over the past year all the other options have outperformed the default fund.

Thanks in advance for any help you can offer

EdInvestor

paulboy83 wrote:

According to the website of the pension plan its invested in the default fund which in the last year has changed an amazing 0.52% :rolleyes: There are other funds on there which are up as much as 14.3%....
....should I look at changing the fund the pension is invested into as with the one exception that is in negative figures over the past year all the other options have outperformed the default fund.-

Yep, I'd have thought you're on the right track there.

dunstonh

Japan, fixed interest and US were down last year. UK, Far east and Europe were up. In other years it will be different.

Dont work on past performance to choose your spread as you are only looking at what has gone before and not at what is to come. A wide spread across the funds/sectors is the best way to do this so you dont have all your eggs in one basket.

paulboy83

Cheers.

Is there a certain percentage I should be aiming to put away now to make it all a bit less painful for myself in the years to come?

Mortgage_&_debt_free

paulboy83 wrote:

Cheers.

Is there a certain percentage I should be aiming to put away now to make it all a bit less painful for myself in the years to come?

A rough rule of thumb is that you should look to invest half your age e.g. if you are 30 you should be investing 15%, at 40 yrs old 20%, etc.

The best rule is probably as much as you can using the above as a minimum, but understandably for many people life gets in the way of such ambitions!

EdInvestor

According to the website of the pension plan its invested in the default fund which in the last year has changed an amazing 0.52% There are other funds on there which are up as much as 14.3% and down as much as 3%

Perhaps you'd like to provide a link, or post the name of the company providing the pension and the funds on offer.

What is the default fund invested in?

Much as it is a good thing to get free money from your employer, there is no point in throwing away your own money (and the benefit of the tax relief such as it is) on a low grade investment.

A pension is just an investment. It will stand or fall on the performance of the funds which your contributions are invested in. You nedd to choose those funds wisely, as you have realised.

If the choices are all poor, put in the minimum to get the free money and look elsewhere to accumulate money to fund your retirement.