Pension V colleagues

theinbetweener007

My employer currently pays in 9% and i pay in 3% which i am very happy with as its much better than i have received anywhere previously. 

A colleague of mine recently suggested that for their 3% contribution, the same employer pays in 12%. They has been here at least 5 years more than me. 

Is this allowed? Is it permissible in the same way that some final salary pensions closed to new joiners?

thanks

Dazed_and_C0nfused

What method is used to pay the contributions?

Net pay

Relief at source
Salary sacrifice

GrumpyDil

As regards the matching yes it is permissable to have different matching values. I am fortunate enough to have a decent 23% non contributory scheme whereas current starters are on a much lower matched scheme.

MX5huggy

I don’t think it’s any different from negotiating your salary to be different from others doing the same work. Perfectly legal as long as non discriminatory criteria are used. 

Historically company pension schemes often increased pension contributions for older staff or long serving staff. 

cfw1994

They perhaps just haven’t understood something…..perhaps they get 12% in total, including their 3% 😉

westv

A previous company I worked at contributed more for those over 50.

Anonymous101

Also possible that the contributions changed at a point in time, cost cutting etc. So if your colleagues have longer service they could have been on a higher contributing contract.
Could also be linked to job title or grade? Company directors often are on different arrangements from non directors for example, but this can also work for other management staff.

There's lots of reasons why contributions may be different. As MX5huggy says entirely legal so long as its non discriminatory.

Albermarle

On a slightly different note, although 12% in total sounds OK, it is still probably less than you need to contribute to build up a decent pension pot. It is difficult to be sure without knowing your age, salary, size of current pot etc but if you can afford it maybe worth thinking about adding more than 3%.

theinbetweener007

Thanks for all replies. Appreciate it. 

Perksy5

I believe it is sadly allowed. My employer historically paid final salary pensions and just before I joined (5 years ago), there was a big communication where they in essence offered big dolla to pay off the people on the old style pensions to save the company money in the long term and move them to the newer style pension which is far less lucrative.
As a middle ground, I believe there was another pension after the final salary one but before the newest, which enabled colleagues to flex up their contributions and the company would pay even more into their pension on the colleagues behalf.
Of course when I joined I didn't get to experience either of those, I'm on the very newest where the company pays a flat 12%, and then I can pay in more if I wish. Not bad compared to some now, but no where near as lucrative as the old style ones.
Some people have won the age lottery by working when they did and staying with their company as long as they did do. Its sadly just the way it is.

Marcon

Anonymous101 said:

There's lots of reasons why contributions may be different. As MX5huggy says entirely legal so long as its non discriminatory.

There's a bit more to it than that. Age related pension contributions are still allowed, but only where the contributions are designed to:

• equalise the benefits that members of different ages in comparable situations will receive from the pension scheme, or
• make those benefits "more nearly equal"

Needless to say, there's no definitive guidance on either of these points!