Contributions - Advice Needed

BlondieLondon

Hi,

I'm about to start a new job and need to fill out the pension form.

I'm 29 and havn't been contributing to a pension fund yet. On the scheme offerred, once I contribute the minimum of 1% my employers will contribute 3%, rising to 5% when I turn 30 next year. I'm just wondering whether I should contribute the minimum or more?

I am due to finish a professional qualification early next year so I should see a decent increase in my salary then so I am considering contributing the minimum now and re-assessing the situation in a years time.

I am still renting and really should be saving for a house deposit, so I have been thinking that contributing the minimum for a few years while I am saving would be best.

Advice would be appreciated!

Thanks

redbuzzard

Sign up immediately, and put in at least enough to get the maximum contribution from your employer (the free money).

BlondieLondon

Thanks - there wasn't a question of whether I would sign up or not. I am definitely signing up. It is just at what percentage personal contribution given I'm not yet a home owner.

redbuzzard

Yes, sorry. I just meant don't dither because every month that goes by would be money foregone from your employer.

My meaning was that if, say 1% from you gets 3% from your employer, would you get a larger employer contribution for a larger employee one?

The last scheme I was in had a choice of 3%, 4% or 5% employee contribution, and the employer would put in 6%, 8% or 10%. I couldn't understand why anybody would put 3% in and miss out on an extra 4% from the company.

xylophone

If you need to save for a house, then it is reasonable to put in as much as will get you the largest employer contribution and then save as much as you can in a cash isa for the house deposit.
See tax relief at
http://www.scottishwidows.co.uk/calculators/tax-calculator.html

BlondieLondon

redbuzzard wrote: »

Yes, sorry. I just meant don't dither because every month that goes by would be money foregone from your employer.

My meaning was that if, say 1% from you gets 3% from your employer, would you get a larger employer contribution for a larger employee one?

The last scheme I was in had a choice of 3%, 4% or 5% employee contribution, and the employer would put in 6%, 8% or 10%. I couldn't understand why anybody would put 3% in and miss out on an extra 4% from the company.

Thanks, yes I'm starting with this new company next month so am filling out my starter forms now so I will contributing straight away :-) Their contribution is fixed based on employee age so 3% will be the max I will get from them.

BlondieLondon

xylophone wrote: »

If you need to save for a house, then it is reasonable to put in as much as will get you the largest employer contribution and then save as much as you can in a cash isa for the house deposit.
See tax relief at

Thanks, yes i think the best plan is to pay the minimum contribution of 1% and then save as much as possible in my ISA.

As per my previous post employers contribution is based on your age group and does not change provided you contribute a minimum of 1%. For 20-30 year olds the company contributes 3%, from 30-40 5% etc.

I will go with this for the time being and reassess in a years time I think, I just feared a 4% contribution overall may be too little at my age, but hopefully I will be in a position to increse this quite a bit in a few years time.

atush

It actually is too little for your age. If you are starting your first pension age 29, you should have 14.5% going in over all. The that includes yours, the employer's and the tax relief too.

What else are you saving for? (ie are you saving to buy a house) Do you have 6 months salary in cash savings in case of emergencies? Do you routinely fill your ISA allowances?

dunstonh

At 29, you are a late starter. Not terminally late but late enough for you to need to start putting more in that you are planning.

I just feared a 4% contribution overall may be too little at my age,

it is .

BlondieLondon

dunstonh wrote: »

At 29, you are a late starter. Not terminally late but late enough for you to need to start putting more in that you are planning.



it is .

Hardly helpful!

BlondieLondon

atush wrote: »

It actually is too little for your age. If you are starting your first pension age 29, you should have 14.5% going in over all. The that includes yours, the employer's and the tax relief too.

What else are you saving for? (ie are you saving to buy a house) Do you have 6 months salary in cash savings in case of emergencies? Do you routinely fill your ISA allowances?

Thanks, yes I know but I did a four year degree, a masters and a year out travelling and as I mentioned coming to the end of my professional qualification now which hasn't paid particularly well doing it but will have me on quite a decent salary relatively soon. I fill my ISA's and saving a home deposit, proving difficult living in London.

What is the 14.5% based on?