Pension contribution for 25 year old

jamesebaker

I have avoided starting a pension for the last few years as the pensions seemed to be in a bit of a crisis at the time. It now seems to have settled down and being 25 its probably about time I started one.

My first question is what should my contribution be? The min is 2.5% and the company contribute 5%.

I am bound to move to another company eventually, so is it possible to simply switch to the new companies pension scheme like you can do with an ISA?

surfcat

Hi James,
I'm in a similar situation to you and hope to start a pension soon. I'm also 25 but don't work yet, as I'm a postgrad student. The general rule of thumb is that when you start pension savings, it should be half your age as a percentage of your income. So add 10 to your figure unfortunately. Ie 12.5%. Then increase every year. Doh.

I'm also interested to hear where to put it. I already save in isas.

irnbru_2

jamesebaker wrote:

I have avoided starting a pension for the last few years as the pensions seemed to be in a bit of a crisis at the time. It now seems to have settled down and being 25 its probably about time I started one.

Assuming you retire at 65 you'll have 40 years of investment period. There'll be a few crisis between now and your retirement.

jamesebaker wrote:

My first question is what should my contribution be? The min is 2.5% and the company contribute 5%.

Invest as much you can, by surfcat's reckonging thats 7.5%. IIRC correctly the limit was 15% - can you strecth to the contribution limit? If so, do.

jamesebaker wrote:

I am bound to move to another company eventually, so is it possible to simply switch to the new companies pension scheme like you can do with an ISA?

Best to ask the pension advisor at your company.

Check out what happens if you die ...... does your spouse/partner get any pension from your contribution.

MarkyMarkD

The 15% limit is on YOUR contributions, not the total contributions from you and the company. There's effectively no limit what your employer can put in, as far as I know.

Murphy_The_Cat

Hi MarkyMarkD

I am in the fortunate position of owning my own company.

Sadly, the age related percentage of salary that you can put into a personal pension does not take into account where the money comes from - i.e. from the individual, the company or both.

BUT

from April 2006 the whole thing is being rehashed and simplified.

MTC

MarkyMarkD

Agreed, MTC, but for company pension schemes the points I made stand - it doesn't matter how much the company contributes. Unfortunately most people's employers aren't going to put huge amounts in!

raeble

I'm twenty-five and I contribute the maximum that my company allows which is about 6%, they then double it with their contribution - so the equivalent of 18% of my salary is going into my pension.

MarkyMarkD

raeble

That's not a bad rate of contribution. Especially at such a sensible young age! Well done.

muckell

raeble wrote:

I'm twenty-five and I contribute the maximum that my company allows which is about 6%, they then double it with their contribution - so the equivalent of 18% of my salary is going into my pension.

I was under the impression that the limited that you can pay in for the age of 25 was 17.5%? I've been paying in 17.5% for a few years now and wanted to up it but was told by the pension company that 17.5% was the maximum cap that i could contribute for my age.

Which pension providor are you with? mines fidelity.

johannamse

raeble wrote:

I'm twenty-five and I contribute the maximum that my company allows which is about 6%, they then double it with their contribution - so the equivalent of 18% of my salary is going into my pension.

Pensions idiot here...how does that work? ie. how do you get to the 18%?

dunstonh

I must admit that i read that after it was posted and was going to reply that it didnt add up. However, i assumed it was just a typo and should have been 12%, not 18%.