Employer Contribution

pollyanna24

My head is swimming with all the information I am trying to cram into it about pensions, haha.


My employer has said that he will contribute towards a pension if I find a private pension for myself. Even this seems complicated. I've been advised to find myself a financial adviser, but I just want a simple pension where I'll put about £100 a month (at first) in, there's nothing complicated about my situation, so don't really want to spend £100s on an adviser.


But what is the standard amount that my employer might be expected to contribute? I know people will say how long is a piece of string? But he has asked me to go away and research stuff and so I want to be able to come back with an answer.


If I put in £100, is it reasonable to expect him to match that or does he put a percentage in?

CLAPTON

depending upon your age you should be thinking about something like 20% (in total) of your salary

what do you earn?

atush

I think you have been with them for a while? And the contributions are tax deductible?

I would think matching 100 a month would be good, as it will only cost them 80 in reality and they will also be able to deduct that 80 from profits before tax.

At this early stage, I don't think you will need an IFA, you could go DIY with a lifestyling option. Once you have a number of thouseands invested you could revisit using an IFA?

have a look at Cavendish online?

atush

You could also say, I am putting in 5%, which is X, would you match that? Or something along the lines if whatever % you were thinking of putting in. This would mean instead of a set 100, if your salary went up, so would the pension contribs? So you wouldn't have to go back each year and ask for uprating.

Debt_Free_Chick

How many people are in the company? At some point, your employer is going to have to put in a workplace pension scheme for the auto-enrolment rules. Quite "when" that happens depends on the number of employees in the company, but it will have to happen at some point, so any work you do now could be wasted

FatherAbraham

pollyanna24 wrote: »

My head is swimming with all the information I am trying to cram into it about pensions, haha.


My employer has said that he will contribute towards a pension if I find a private pension for myself. Even this seems complicated. I've been advised to find myself a financial adviser, but I just want a simple pension where I'll put about £100 a month (at first) in, there's nothing complicated about my situation, so don't really want to spend £100s on an adviser.


But what is the standard amount that my employer might be expected to contribute? I know people will say how long is a piece of string? But he has asked me to go away and research stuff and so I want to be able to come back with an answer.


If I put in £100, is it reasonable to expect him to match that or does he put a percentage in?

Don't rush into answering the employer's question. You're being asked to propose a new benefit, when you don't know much about it. That's a terribly hard job, and you need to take your time.

Employer contributions to defined-contribution pension plans are usually based on a percentage of your earnings. Don't suggest a fixed amount like "£100 per month", because that could end up looking very small after five years of inflation.

You probably want a low-cost personal pension. If you yourself have to pay for an IFA to find one, that could be quite expensive. Have you read the local article on dis!!!! pensions? http://www.moneysavingexpert.com/savings/discount-pensions

Going through a fixed-price, no-advice IFA like Cavendish Online may be the best way forward -- unless your employer is paying for the IFA to advise you.

You have a difficult task, because you need to present a proposal which is likely to be accepted, or at least negotiated from, by your employer, without making a proposal which is too low. It sounds like you also need to present some evidence of what the industry norms are.

Remember that the legal minimums used for auto-enrolment (1%+1% rising to 3%+3% in a couple of years) are indeed minimums. Aim higher, since you'll end up with at least 3%+3% even if you do nothing.

A really good employer match would be 100% matching up to 10% of your salary (no doubt someone on here will be along in a minute to say that he or she gets more).

I had one employer who paid 5%, regardless of how much I contributed. Another paid 8% if I paid 6%, which is clearly more than 100% matching.

Good luck,
FA

xylophone

This was discussed before https://forums.moneysavingexpert.com/discussion/comment/64828296#Comment_64828296

Have a look at these links http://www.scottishlife.co.uk/scotlife/web/site/Adviser/TechnicalCentralArea/Informationguidance/Contributions/Employercontributions.asp

http://www.accountingweb.co.uk/anyanswers/employers-contributions-personal-pension-scheme

Would it not be better for you and your employer to discuss the matter with an IFA expert in pensions?

He's going to have to get his act together within the next couple of years anyway! http://www.thepensionsregulator.gov.uk/employers/finding-a-provider.aspx