Pension - how much to save

teadrinker1

Wonder if anyone can help.

Let's say I start a pension at age 32. I read the recommendation that you should pay in, as a percentage of your salary, half of your age every year. so that is 16 per cent of my salary (which is £30,000pa) which 'only' amounts to £4,800 per year.

Does this recommendation mean I have to pay 4,800 in per year? What I mean is, can I pay in a lower figure and it increases to £4,800 because of the tax relief?

If so, how much should I pay in then each year to bring it up to 4.8k?

Sorry if muddled. Thanks a lot!

xylophone

http://www.pensionsadvisoryservice.org.uk/personal-and-stakeholder-pensions/personal-pension-plans/contribution-levels-and-tax-relief

atush

Yes, it gets grossed up by BRT.

But if you are just starting at 32 I might contribute more (esp if you have cash and other ISA savings) as the other generalisation is to have 35K at your age and you don't have that and wont for a number of years at 4800 pre year?

JoeCrystal

Well, one way to figure out what level of contribution is by using a pension calculator. Here is the LINK

According to this, taking into various assumptions, and wanting to retire at 65 with £4,800 per year into it. It may generate pension income of £12,162 per year. If you want have higher income, then you would need to pay even more into it. If you work for a company, it may be worth finding out if they offer any employer's contribution into pension scheme at work. If you are self employed, then you need to catch up even more as you would not be paying class 1 NI.

Cheers

Joe