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

BananaRepublic

Yes 3% is mean. My experience is that employers who cheap out on the pension are mean minded and best avoided. If employers want to keep staff, and believe they are contributing to society, not just filling their pockets, they pay a decent salary. 

CSL0183

My company (private) matches to a maximum of 10%. New employees start at 6% matched and then every 3yrs get an additional 1% upto a maximum of 10% matched. They also add on the equivalent of 1% for the Death in service benefits of 5x annual salary. 

Contributions are made through salary sacrifice so make use of the full 43% tax relief (Scotland). I could of course put more into it but quite happy with 20% combined @ age 37 just now.

NHS is still a really good scheme (even under CARE scheme), you will never replicate it in the private sector. Well 99.9% chance that you won’t. 

ischofie1

I have to agree with other comments in that Co’s that pay min pension cont are generally stingy & possibly best avoided. I consider myself lucky in that my Co pays 15% for my min cont of 5%. It’s done via Sal sac which helps & includes a 7 times death in service factor. 

Anonymous101

ischofie1 said:

I have to agree with other comments in that Co’s that pay min pension cont are generally stingy & possibly best avoided. I consider myself lucky in that my Co pays 15% for my min cont of 5%. It’s done via Sal sac which helps & includes a 7 times death in service factor. 

They're excellent benefits for private sector.
Do you mind me asking what industry you work in? My limited anecdotal experience is that benefits such as pension and death in service are often comparable within an industry but may be very different industry to industry.

Malthusian

ischofie1 said:

I have to agree with other comments in that Co’s that pay min pension cont are generally stingy & possibly best avoided.

My employer pays auto-enrolment percentages (albeit on the whole earnings) but is exceptionally good to work for. They trust their employees to work out for themselves how much of their pay packet should be going into their pension and are very generous in other ways. And they operate salary sacrifice and pay in their own 13.8% NI saving, which brings it a bit closer to the 1-1 matching with the employer pocketing the NI saving that is the standard for average-earning jobs.

But I still agree with your post. Small companies like my employer are the exception, not the general rule.

15% employer matching for 5% employee is very good - benefits like these are often the result of a collective agreement when the final salary scheme was closed.

westv

The best I had was 20% employer.
The worst 9% + 3% depending on how well business did.
Both sal sac schemes.

AlanP_2

webnibbler said:

Also worth investigating if the employer passes any NI savings on to add to the contribution. Some more generous employers pass on 100% of their employer NI savings (13.8% of employee contribution). This will add a little more on top of the 3%.

If they don't then it's definitely on the stingey side.

The NI saving is only applicable for a Salary Sacrifice scheme, and it doesn't sound like this is. What is on offer is 5% employee and 3% employer so no NI savings for either party.If it was 0% employee and 8% employer through SS there would be an NI saving for both parties and the employer may or may not share their saving with the employee. 

triplea35

My son works in the Hospitality sector and has had various employers. All without exception have been extremely stingy, Low salaries to start with, compounded by absolute minimum pension benefits, 3 month wait before joining schemes and disregarding the first £6240 of earnings. 5% employee/3% employer in those circumstances are ridiculously low.
As I have taken an interest in this, and have been in the fortunate position to do so, I have made significant contributions to his pension. As an only child I suppose he will also be fortunate enough to rely on some inheritance in the future.

But it really does concern me on the numbers of people who may be uninformed and will have a very poor future to look forward to!  

AlanP_2

triplea35 said:

My son works in the Hospitality sector and has had various employers. All without exception have been extremely stingy, Low salaries to start with, compounded by absolute minimum pension benefits, 3 month wait before joining schemes and disregarding the first £6240 of earnings. 5% employee/3% employer in those circumstances are ridiculously low.
As I have taken an interest in this, and have been in the fortunate position to do so, I have made significant contributions to his pension. As an only child I suppose he will also be fortunate enough to rely on some inheritance in the future.

But it really does concern me on the numbers of people who may be uninformed and will have a very poor future to look forward to!  

I appreciate your point re a very poor future (possibility) but Auto Enrolment overall has been a tremendous success and there are now a lot more people with pensions than there were before as this article highlights https://www.express.co.uk/finance/personalfinance/1388869/pension-auto-enrolment-is-pension-mandatory-EVG.

Those of us, who have benefitted from a generous employer DB scheme and / or a role where the employer contributes generously to a DC scheme are fortunate and see the AE minimums as "poor" but for those who had nothing before....

NedS

I am lucky enough to be a member of the Civil Service Alpha DB scheme. I recently looked at what it would cost me to purchase (through added pension) the amount of DB pension I naturally accrue each year, to help me put a value on my pension - the answer was exactly 30% of my salary. For that, I actually pay a contribution of 5.45%, so by extension I consider my employer to be 'contributing' the equivalent of 24.55%

That is the generous end of the scale. 3% auto-enrolement is the opposite end of the scale. Obviously a pension is just a part of the overall package, and as a civil servant I also place value on things such as flexible working and job security (very important atm) in addition to the pension which goes a long way to offsetting the low(er) pay and non-existent pay rise. There is a lot more to a position than just the pension. As a wise man once said, you're a long time working, so you better pick a job you like.