Young save more for pension than any other group

chucknorris

SeduLOUs wrote: »

I had a look at my partner's payslip recently and he has been auto-enrolled into a company pension scheme paying in ees of £7 a month, with ers contributions of £9 per month on ~£1100 gross so I can't imagine what long term value it might have but it's obviously going to be pathetic.

I have asked him to get some more information from employer, but will probably get him to opt out and we will look at other alternatives.

I currently pay in 6.5% and employer puts in 14% to the NHS scheme so it's a stark contrast!

It is still good value because he is only putting in 35% (£7) of the total investment (£20), so 65% is being added to his £7 contribution (£11 employer contribution and £4 tax relief).

CLAPTON

SeduLOUs wrote: »

I had a look at my partner's payslip recently and he has been auto-enrolled into a company pension scheme paying in ees of £7 a month, with ers contributions of £9 per month on ~£1100 gross so I can't imagine what long term value it might have but it's obviously going to be pathetic.

I have asked him to get some more information from employer, but will probably get him to opt out and we will look at other alternatives.

I currently pay in 6.5% and employer puts in 14% to the NHS scheme so it's a stark contrast!

don't get him to opt out as the employers bit is 'free' money


also the amount will increase until by 2018 a total of 8% will be saved


by all means open a second pension for him but don't opt out of this one

SeduLOUs

chucknorris wrote: »

It is still good value because he is only putting in 35% (£7) of the total investment (£20), so 65% is being added to his £7 contribution (£11 employer contribution and £3.20 tax relief).

I understand that, but assuming he stays in his job for the next 39 years (to age 70) and his salary doesn't change (I know unlikely, but for the sake of simplicity), then the total contributions are only £7,500 so what 'pension' could he possibly get of any real worth? I am unclear yet as to what type of scheme he is paying into, but I imagine no scheme likes to pay out more than has been put in...

I have only been contributing to my pension for 4 years (age 30), but am already in a position where if I left my job now I could claim a pension at aged 65 of approximately £1200 per annum.

AndyGuil

He should up his contributions is he wants more pension. If he works for a company of 50 or more then they should legally be paying 3% employers contribution.

chucknorris

SeduLOUs wrote: »

I understand that, but assuming he stays in his job for the next 39 years (to age 70) and his salary doesn't change (I know unlikely, but for the sake of simplicity), then the total contributions are only £7,500 so what 'pension' could he possibly get of any real worth? I am unclear yet as to what type of scheme he is paying into, but I imagine no scheme likes to pay out more than has been put in...

I have only been contributing to my pension for 4 years (age 30), but am already in a position where if I left my job now I could claim a pension at aged 65 of approximately £1200 per annum.

The answer then is to invest more in a second pension. You can't compare your NHS DB pension to his DC pension. I know the value of those, I have been in the teachers' pension scheme for 4 years now and have achieved a pension of over £8,600 (incl. buying additional pension) and I still invest in a SIPP, I invest up to the max annual allowance of £40k.


By the way I edited my post, but not before you quoted it, it is £4 tax relief not £3.20.

SeduLOUs

AndyGuil wrote: »

He should up his contributions is he wants more pension. If he works for a company of 50 or more then they should legally be paying 3% employers contribution.

I know. I'm going to find out more information about the 'scheme' he has been signed up to and then make an informed decision as to whether he should increase contributions or look at other alternatives. There are definitely more than 50 staff so it obviously needs further investigation.

I'm not shocked by the lack of info given as I've been informed this week that his bonuses are to be paid in gift vouchers, and an email from his manager explains that this is because gift vouchers are tax free. :eek:

I'm not looking for advice (yet). I posted to give an example of a failure of the auto-enrolment pensions. Unwise or indifferent employees may think that by being part of a pension they are all set for a comfortable retirement, but if other companies are setting contributions at similar rates to this (i.e. Ees + Ers < 2% of gross) then I don't really see the point in being enrolled at all...

CLAPTON

SeduLOUs wrote: »

I know. I'm going to find out more information about the 'scheme' he has been signed up to and then make an informed decision as to whether he should increase contributions or look at other alternatives. There are definitely more than 50 staff so it obviously needs further investigation.

I'm not shocked by the lack of info given as I've been informed this week that his bonuses are to be paid in gift vouchers, and an email from his manager explains that this is because gift vouchers are tax free. :eek:

I'm not looking for advice (yet). I posted to give an example of a failure of the auto-enrolment pensions. Unwise or indifferent employees may think that by being part of a pension they are all set for a comfortable retirement, but if other companies are setting contributions at similar rates to this (i.e. Ees + Ers < 2% of gross) then I don't really see the point in being enrolled at all...

why not actually read my post and use a search engine to find out more details about the new system

SeduLOUs

CLAPTON wrote: »

why not actually read my post and use a search engine to find out more details about the new system

I'm not planning on doing anything immediately. I need to find out more information about what he has been signed up to and what benefit this is likely to get him in the long run. Even at 8% it clearly isn't enough of a contribution so I need to kick him up the bum to do something pro-active to increase it, either via his employment or elsewhere.

As previously stated, my reason for posting was to illustrate that the auto-enrolment is just a potential disaster waiting to happen, with apathetic employees simply trusting that they are all set when the contributions are set at far too low a level. Yes, some contributions are better than none, but if the Gov. is going to nanny everyone into pension schemes it would have been sensible to do it at more appropriate contribution rates.

CLAPTON

SeduLOUs wrote: »

I'm not planning on doing anything immediately. I need to find out more information about what he has been signed up to and what benefit this is likely to get him in the long run. Even at 8% it clearly isn't enough of a contribution so I need to kick him up the bum to do something pro-active to increase it, either via his employment or elsewhere.

As previously stated, my reason for posting was to illustrate that the auto-enrolment is just a potential disaster waiting to happen, with apathetic employees simply trusting that they are all set when the contributions are set at far too low a level. Yes, some contributions are better than none, but if the Gov. is going to nanny everyone into pension schemes it would have been sensible to do it at more appropriate contribution rates.

8% is not a disaster


and remember that your employer's contribution is merely a burden on the taxpayers while his is a 4% increase in wages costs for his employer


plus, if the employee contribution was too much people may opt out


he is free to open another pension whenever he likes.

wotsthat

Graham_Devon wrote: »

I'm not sure what you appear so confused about. Afterall, this is just you being difficult..... truthfully, you get it.

Of those young who work, they save more into a pension.

You can have both high youth unemployment and young workers paying more into pensions as a percentage of their income than other groups.

It's not difficult.

It would be nice to think the young were saving sufficiently for a secure retirement but the figures don't tell us that. 40% of young workers aren't and none of the non-workers will be either.

Saving a higher % than other groups is nice for a 'generation' thread but the other groups aren't saving enough either so hardly an aspirational target.