Is my company pension any good compared to others?

Rosey78

Hi,

I have a salary sacrifice scheme pension and I wondered how it compared to other private sector pensions?

Here are the contributions

Employee Employer. Additional over UEL
5%. 8.5%. 3%
6%. 8.6%. 3%
7%. 8.7%. 3%
8%. 8.8%. 3%

And so on up to

25%. 10.5%. 3%


I know there are better ones in the public sector, but was wondering about the others?

Thanks

jamesd

That's fairly good at the bottom end and some useful increase for those who are paying in more. The additional over UEL is very sensible, shows the company is thinking of the reduced incentive for higher rate tax payers to do it, which would cost the company more in lost employer NI than the employee would lose by using their own pension instead.

Looks as though there's some part of the saved employer NI showing up in increased employer contributions below the NI UEL and helping those at basic rate who pay in more.

Neither especially generous nor especially bad.

Zelazny

Compared to a private pension, it's light years ahead. You get free money from your employer!

Compared to other occupational schemes, it seems reasonably generous for a DC scheme, but not as good as a DB scheme.

atush

I think it is very generous- good one. How much are you contributing?

I have seen one with employers contribs of 19%, but that is very unusual these days.

Shimrod

It's an above average employer contribution (the average is around 6.4%), although this varies by sector. My recollection is that the travel sector was most miserly, with the financial sector the most generous at an average of 15%.

The normal advice is to contribute enough to get at least the maximum employer contribution, but given that involves sacrificing 25% of your salary for what is probably a marginal gain I would not apply that rule in this case.

laughingboy

What does "Additional over UEL" in the OP mean?

sorcerer

That's very good, my company will only put a maximum of 5%, and I put a minimum of 3%.

jamesd

UEL means Upper Earnings Limit, a National Insurance term. It's the top limit on how much income you pay employee National Insurance on. It's roughly aligned with the start of the higher rate tax range.

It matters in this context because the NI saving is a significant part of what makes salary sacrifice attractive. When most of the NI saving stops, that's also the income level at which the company might lose a saving that is six times what the employee would save, if the employee made pension contributions to a different pension scheme instead.

Rosey78

Shimrod wrote: »

It's an above average employer contribution (the average is around 6.4%), although this varies by sector. My recollection is that the travel sector was most miserly, with the financial sector the most generous at an average of 15%.

The normal advice is to contribute enough to get at least the maximum employer contribution, but given that involves sacrificing 25% of your salary for what is probably a marginal gain I would not apply that rule in this case.

Thanks all, Shimrod, I was wondering how much I should contribute to maximise benefits for my pension, and it seems that I should stick to this scheme and contribute as much as I can in this rather than look for any other vehicles for a pension? Or should I look for another option in parallel ? I've only recently started looking at pensions. A bit late as I'm 33, so looking to do a bit of catching up!

Rosey78

atush wrote: »

I think it is very generous- good one. How much are you contributing?

I have seen one with employers contribs of 19%, but that is very unusual these days.

Hi Atush, I'm only putting in 5% currently, but pension calculators indicate that I need to do more, it's astonishing how much you need to put away!

Rosey78

laughingboy wrote: »

What does "Additional over UEL" in the OP mean?

Hi Laughingboy, I must be honest I had no idea what it mean't, but with regards to this pension, it seems to mean that they will contribute an additional 3% on anything I earn over around £43k