should i contribute more into my pension?

orange86

I contribute 5% and they match up to this 5%.  I emailed HR to ask if they will look to increase over 5% and got told no!

My friend works in the nhs and gets an amazing pension, unlike me.

Is it worth contributing more, say 7% into the pension pot?

theoretica

It is very likely worth saving more than 5% for your future if you can without making your present miserable - I really don't like the idea of working until I am 68! - but whether increasing your current pension is the right choice may need a bit more calculating.

Simon11

If you are able to provide more information about your circumstances, we can advise a bit more (your age, retirement age aim, current pension pots size, current income ect). 

Without knowing much, increasing from 5% to 7% may still not given you a suitable sized pension when you need it and more is always better, especially if you want a decent retirement/ retire earlier than 67. Personally, I put in 24% with employer 5% on top, after realising this a year back!

Marcon

orange86 said:

I contribute 5% and they match up to this 5%.  I emailed HR to ask if they will look to increase over 5% and got told no!

My friend works in the nhs and gets an amazing pension, unlike me.

Is it worth contributing more, say 7% into the pension pot?

At the risk of stating the blindingly obvious, your employer's 5% pension contribution is part of the overall package they offer you. Jobs carry different benefits. If an amazing pension is top of your priority list, then you need to look at the possibility of working in the public sector - or find a private sector employer with a particularly good pension offering, assuming the salary is equally good!

Otherwise, if you want to increase your retirement benefits, paying more into your pension is likely to be the most tax-efficient way to do so.

Do you pay your own contributions by salary sacrifice? If not, that is worth raising with HR, since both you and they would see a saving in the amount of NI payable.

[Deleted User]

orange86 said:

I contribute 5% and they match up to this 5%.  I emailed HR to ask if they will look to increase over 5% and got told no!

My friend works in the nhs and gets an amazing pension, unlike me.

Should you contribute more? Of course.  If you can. Its a balance; you want your family to have a decent life but if you can afford to contribute more by cutting down on beers and Starbucks (or whatever your shtick) then you should.

Great story, by the way. 

TimSynths

orange86 said:

My friend works in the nhs and gets an amazing pension, unlike me.

NHS Jobs - Candidate Homepage

Workerdrone

Simon11 said:

If you are able to provide more information about your circumstances, we can advise a bit more (your age, retirement age aim, current pension pots size, current income ect). 

Without knowing much, increasing from 5% to 7% may still not given you a suitable sized pension when you need it and more is always better, especially if you want a decent retirement/ retire earlier than 67. Personally, I put in 24% with employer 5% on top, after realising this a year back!

Years ago when sorting my life cover for my mortgage, I got chatting to the IFA about pension contributions. His take on it was to get anywhere near what a DB scheme pays out people would need to be putting in between 20-24%. It was at that point I started ramping up contributions. I'm not massively paid. Will go up to 38.2k in January. My employer starts matching contributions at 6% and goes up to 10%. So now I put in 33.4% and the employer puts in 10%.

It is easy to get addicted to saving and forget about living though. Ive not really given myself a pay rise in about 10 years. Ive always just pushed the extra from the tax code and any cost of living increases/savings on DD's etc into pension.

This Christmas however Mrs Workerdrone and I, after much tough deliberation and as a one off have decided not to save our usual £1000 into the offset account (This is separate to pension) and instead just to have that extra £500 each to enjoy Christmas and make January not seem as long. Trouble is I have no idea what to spend it on. I'm so out of the habit of treating myself.

Its hard to break the mindset of accumulating.

dunstonh

Years ago when sorting my life cover for my mortgage, I got chatting to the IFA about pension contributions. His take on it was to get anywhere near what a DB scheme pays out people would need to be putting in between 20-24%

It sneaked up to around 30-35% over the last decade.   Partly due to life expectancy and low gilt yields.

Is it worth contributing more, say 7% into the pension pot?

You are asking us for solutions without telling us what your needs and plans are.

Will the pension achieve your objectives in your retirement years?
Are there any side benefits that make it better than alternatives in your scenario? (e.g.  being outside of the estate can be highly beneficial for those with larger estates but not a benefit for someone with assets less than the IHT limit).
Do you have excess income and are just looking for the best place to put the money?  (pension beats ISA for most people).

Workerdrone

It sneaked up to around 30-35% over the last decade.   Partly due to life expectancy and low gilt yields.

Good to know I am accidentally on the right track then.

Pat38493

Workerdrone said:

Years ago when sorting my life cover for my mortgage, I got chatting to the IFA about pension contributions. His take on it was to get anywhere near what a DB scheme pays out people would need to be putting in between 20-24%. It was at that point I started ramping up contributions. I'm not massively paid. Will go up to 38.2k in January. My employer starts matching contributions at 6% and goes up to 10%. So now I put in 33.4% and the employer puts in 10%.

When my company froze the DB scheme in 2008, I seemed to be the only employee who raised any objection or fuss about it - I was trying to explain to some of my colleagues that when the company does this, it's in many ways equivalent to a 20% pay cut, and do they think they should be taking this without protest?  Especially since it actually set out the DB benefits that I would get direclty in my original contract of employment from 1991, and probably the same for many of them as well.

Unfortunately, in human psychology people tend to ignore large consequences that are far into the future in favor of smaller issues that are today or tomorrow. 

TimSynths

Workerdrone said:

It sneaked up to around 30-35% over the last decade.   Partly due to life expectancy and low gilt yields.

Good to know I am accidentally on the right track then.

Im saving 21% in total- i did feel a bit smug, that has now been wiped off my face.