Is a minimum legal pension contribution the 'norm'?

engineer0101

My employer only contributes the legal minimum - 3% from them and 5% from me. Talking to friends and family their employers seem to go above and beyond this, some even doing 10% matched (which I realise is probably rare). My point is - are peoples employers also doing the bare minimum or are mine just cheap? Looking for reasons to move and this could be one of them.

Workerdrone

engineer0101 said:

My employer only contributes the legal minimum - 3% from them and 5% from me. Talking to friends and family their employers seem to go above and beyond this, some even doing 10% matched (which I realise is probably rare). My point is - are peoples employers also doing the bare minimum or are mine just cheap? Looking for reasons to move and this could be one of them.

I think my employer BT starts at 6% matching and goes up to 10%

JoeCrystal

engineer0101 said:

My employer only contributes the legal minimum - 3% from them and 5% from me. Talking to friends and family their employers seem to go above and beyond this, some even doing 10% matched (which I realise is probably rare). My point is - are peoples employers also doing the bare minimum or are mine just cheap? Looking for reasons to move and this could be one of them.

I worked for a large employer, and they went for minimum automatic enrollment, so only three per cent of an income above £520 is contributed to my work pension. If your employer paid their 3% contribution on your entire income, then your employer is already doing more than the minimum required by regulation!

You can always work for an employer with a DB pension scheme, mainly in the public sector; they are still excellent value for their employees. You are just going to have to find an employer who is willing to contribute a lot more, I am afraid. 

Albermarle

engineer0101 said:

My employer only contributes the legal minimum - 3% from them and 5% from me. Talking to friends and family their employers seem to go above and beyond this, some even doing 10% matched (which I realise is probably rare). My point is - are peoples employers also doing the bare minimum or are mine just cheap? Looking for reasons to move and this could be one of them.

It varies a lot . I think generally larger companies , maybe trying to keep hold of a skilled workforce , pay more.

I think my employer BT starts at 6% matching and goes up to 10%

My last employer ( largish company) had  similar arrangements.

Thrugelmir

engineer0101 said:

My point is - are peoples employers also doing the bare minimum or are mine just cheap? Looking for reasons to move and this could be one of them.

Not so long ago there was no bare minimum at all. Pension contributions need to be weighed up in the overall remuneration package offered by any employer. As there's nothing to stop you increasing your own contribution if you wished. 

400ixl

It will really depend on whether the company believes that this is a big consideration for attracting and retaining employee's. If it isn't then why would they want to offer more?

If they offer salary sacrifice on the employee side then it is all part of a package where a higher salary could be more attractive and the employee contributes more getting the tax and NI benefits back that way.

So it isn't the only measure as to how it can be seen by the employee.

To gauge what their competitors do, it may be worth posting the industry they are in as this could make a big difference. You also want people to consider the new joiner rate as historically pensions could have been much more generous than they are today.

Marcon

Thrugelmir said:

engineer0101 said:

My point is - are peoples employers also doing the bare minimum or are mine just cheap? Looking for reasons to move and this could be one of them.

Not so long ago there was no bare minimum at all. Pension contributions need to be weighed up in the overall remuneration package offered by any employer. As there's nothing to stop you increasing your own contribution if you wished. 

That's the key comment in this thread. A salary of £20K with 10% employer contributions isn't a better option than a salary of £22K with 3% employer contributions, as simple arithmetic will soon tell you - and paying more yourself (preferably by salary sacrifice to get an NI saving as well as the tax advantages) is always a possibility.

dunstonh

Employers that value staff and need to attract high-quality staff tend to pay above the minimum.  Employers that do not value staff or don't need to attract quality staff tend to pay the minimum.

Brie

Many employers have over the last decade or two reduced/devalued the pensions they offer their staff.  Many have gone from having excellent DB schemes, some without any employee contribution required and switch to various versions of DC ones.  My employer had a great DB scheme that was already closed to new employees when I joined them nearly 15 years back but the DC scheme was very good - I contribute 3% & my employer a whopping 17%.   New joiners in the last 10 years only get 10%.  They have also reduced the overall number of employees in the UK and off shored or outsourced many of the roles so it's all part of not valuing their employees.

YBR

A potential employer I was considering advertised as generous their up-to 6% match. I didn't think that was especially generous in my industry.

Albermarle

Brie said:

Many employers have over the last decade or two reduced/devalued the pensions they offer their staff.  Many have gone from having excellent DB schemes, some without any employee contribution required and switch to various versions of DC ones.  My employer had a great DB scheme that was already closed to new employees when I joined them nearly 15 years back but the DC scheme was very good - I contribute 3% & my employer a whopping 17%.   New joiners in the last 10 years only get 10%.  They have also reduced the overall number of employees in the UK and off shored or outsourced many of the roles so it's all part of not valuing their employees.

Yes, I think often employers with what seem to be generous % contributions to a DC scheme, it is sometimes because they have closed an even better DB scheme, and needed to offer a reasonably decent DC to try and stop too much of an issue with employee relations.