Personal Percentage % contribution

dprice

You always read suggestions you should contribute roughly halfyour age as a % to pensions. I am 29 so let’ssay 30 equates to 15%.

Is this 15% of my gross or net?

Is it 15% minus my employers contributions which iscurrently 5%?

Is it 15% before tax relief or after?

I currently only contribute 4% before tax relief. I have 2 years left before student loan ispaid off. I plan to contribute the fullstudent loan deduction to pension after this has stopped. Considering if I should up my contributionnow before student loan ends and want to understand peoples thoughts onpersonal contribution percentages.
I currently have a pension pot of 13k.

Thanks

Lokolo

It would usually be in total of gross, but its a guide, it doesn't gaurentee you anything.

http://www.hl.co.uk/pensions/interactive-calculators/pension-calculator

There's a nice little calculator here which will help, but it has assumptions, such as pension growth rate, current annuity rates, increase in contributions every year.

It really does depend on individuals though. I am 25 and contribute 20%, and will up this next year depending on my salary review and bonus. But I have high employer contributions, pay higher rate tax and have the ability for salary sacrifice. So for me it makes sense.

If you only pay 20% tax, that is the maximum employer contribution you get, then it may make sense to utilise other tax saving vehicles for retirement, such as S&S ISA.

Your retirement income doesn't just have to come from pensions, but it depends on your individual circumstances as to where you put the money for retirement.

atush

The employer's contribs and tax relief count as part of the 15% (gross).

But that figure assumes you didn't have a pension before (do you?) and you may need to adjust it as you go forwards in time- as it does assume you wil increase contribs as your salary increases.

Someone who starts paying in 100/month at the start and nver raises it won't get the same out come as one who does.

jamesd

It doesn't matter whether that number is gross or net. Use a retirement planner to work out what you should be putting in to get to the target income you want at the age you want. Putting more in at earlier ages is very valuable because of the extra years of compound growth. There's a lot of useful discussion in Pension calculation help to get me to 25k pa and I recommend that you read it and experiment.