Whats considered a "good" employer pension? Me 5% employer 3%?

[Deleted User]

Considering new job and its 5% me and 3% from employer. Is this considered good?
Also, and I know the NHS pension is way different - I contribute 9.6% to that at the moment in current job. How does this compare?
Also, if I did leave would my NHS pension be frozen?
(I know NHS WAS very good but they've chipped away at it over the years)

JoeCrystal

It is still one of the best pension scheme in the country with bells and whistles such as Ill health retirement and other add-ons. It is considered worth a third of your salary.

Your potential new job is the legal crappy minimum required by laws. Is the contributions based on whole earnings or even worse, just the qualifying earnings above £6240?

Albermarle

5% and 3% is the auto enrolment legal minimum , if you opt in ( which you should ) .
All public sector pension schemes are in a different league than auto enrolment pension , despite the 'chipping away' 
They offer guaranteed retirement income and at decent levels if you work there long enough.
I would say that all other things being equal, you probably need your new job to have a 15 to 20% higher salary just to compensate for the much worse pension. Then if you start the new job immediately increase your pension contribution well above 5% so there is a chance of a decent sized pot building up eventually.
Also I would be wary of an employer only offering the legal minimum contribution of 3% . Good employers are usually a bit more generous .

barnstar2077

If you are talking about a DC scheme then I would say that 3% from the employer is not generous.  I work a menial job and if I pay in 5% my company gives me 10%.  Mine is probably better than most, but the fact that your percentage is higher than your companies contribution is not a good sign in my opinion.

molerat

Are you likely to get more out of the legal minimum of 5% + 3% on maybe a limited portion of earnings or 9.6% + 20.68%, let me think about that one !

Mutton_Geoff

My employer offers 5% basic with no input from me on a sliding scale up to 6% employee 15% employer. With sal sac, works out to 21.6% in for contribution of 6% from employee.

dunstonh

Considering new job and its 5% me and 3% from employer. Is this considered good?

That is the minimum required under auto enrolment.  It is the default effectively.   The minimum cannot be considered good.  Lots of employers go beyond that minimum.

Also, and I know the NHS pension is way different - I contribute 9.6% to that at the moment in current job. How does this compare?

Overall, the NHS pension would cost around 30% of your salary to replicate.   i.e. you would need to up that 5%+3% to around 30% to get a similar end pension.  Plus, arrange a life assurance policy to replace the death in service.  The NHS pension is not as good as it was but it is still in the gold standard category.

Also, if I did leave would my NHS pension be frozen?

No.  The NHS pension cannot become frozen. It will become deferred.

Marcon

dunstonh said:

Also, if I did leave would my NHS pension be frozen?

No.  The NHS pension cannot become frozen. It will become deferred.

...and the pension increases in deferment (i.e. the period between leaving the scheme and accessing your benefits from it).

You need to look at your pension in the new job in the light of the your overall remuneration package. If you're being offered a hefty salary increase, you could also contribute extra to the new pension yourself (preferably using salary sacrifice to get an NI saving).

Anonymous101

I would say that your scheme is quite miserly only being the legal minimum. Most private scheme's I've come across at least match up to say 5%. In my industry they are typically 5-10% matched with a few employers offering up to 2x contributions capped at 9-10%.

Interestingly enough the benefit of employer matching I think has been eroded over time. For example a 6% matched contribution used to be quite a benefit over 0% employer contribution. Now everyone is on at least 3% so the 6% match isn't substantially better than minimum.

Marcon

Anonymous101 said:

I would say that your scheme is quite miserly only being the legal minimum. 

...but what else is on offer as part of the package, not least salary.... You really can't just pick out one element and say it is 'miserly' (minimum, yes!).

Hopeless2

i think if the employer matched your 5% then that would be fair,  3% from employer is pretty poor , i think anyway