should i contribute more into my pension?

[Deleted User]

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

That’s a completely random number.  

There are different DB schemes with different levels of contributions and benefits.  NHS scheme involves contributions at around 25-30% total depending on income (https://www.nhsemployers.org/articles/pension-contributions-and-tax-relief).  

In practice the answer also depends on unknown expected returns over many decades, unknown strategy for drawing from a DC pot, unknown inflation over several decades, unknown career progression,  unknown number of years before retirement and unknown life expectancy.  

My personal opinion is that for most people saving a third of their income in early years is an unreasonable and unnecessary expectation which would hurt young family’s living style and is unnecessary. Contributions can usually be increased over time as “excess” pay allows it during career progression.  

Workerdrone

TimSynths said:

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.

Yeah but somewhere along the line I completely forgot to live for the moment. Schoolboy error. I might kick the bucket and not get to enjoy it. Still at least my family will be provided for :-)

badmemory

TimSynths said:

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

I think that you still have bragging rights.  Most people don't even contribute 8% of their total income.

Albermarle

Deleted_User said:

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

That’s a completely random number.  

There are different DB schemes with different levels of contributions and benefits.  NHS scheme involves contributions at around 25-30% total depending on income (https://www.nhsemployers.org/articles/pension-contributions-and-tax-relief).  

In practice the answer also depends on unknown expected returns over many decades, unknown strategy for drawing from a DC pot, unknown inflation over several decades, unknown career progression,  unknown number of years before retirement and unknown life expectancy.  

My personal opinion is that for most people saving a third of their income in early years is an unreasonable and unnecessary expectation which would hurt young family’s living style and is unnecessary. Contributions can usually be increased over time as “excess” pay allows it during career progression.  

These % include employers contributions. So if you had a good employer who would say put 10% in to your DC pension, then you personally do not have to add 25 to 30% to get a pension as good as a DB pension ( although for reasons you explain, putting an exact figure on it is not possible)
I think if you can both add 10%, and then in later years you add more when you can afford it/ maybe have a higher salary,  you should build up a pretty decent pot, by most people's standards.

Workerdrone

I think Morko is more referring to my 33.4% being a random number. I agree it is.Every time I make a small saving on a direct debit or something else I just chuck it in the pension as so far I've not needed it. I like round numbers so if my regular contribution was £1338, I prefer to aim for £1350 hence the odd 33.4%. Im 47 in January so already into the later years category and for personal reasons which I won't bore people with moving into higher paid work isn't feasible so instead I choose to plod. I've got £230k at current market value and will put in another £223k before I hope to retire at 60. If Im lucky and the markets turn ok that might take me up to around the LTA which isnt bad for a fairly medium paid employee

noclaf

Pension contributions is a challenging area for myself personally, I have a child under 1 years old so knowing there is a long term significant financial commitment but also being aware of the importance of building a reasonable size pension to support retirement, it's a tricky balancing act.

Currently contributing at a combined 21.5% of monthly gross (11.5 from employer and 10 from myself) as much as I would prefer to push in more think it would end up running the finances a bit too tight for comfort as currently on a single income household. I was contributing around 25% a few months back, have dropped down but the benefit is my student loan payments have increased and should allow me to pay it off completely in 18 months at which point I will shovel more into the pension then.
Sometimes ideas come and go in terms of approach to growing the overall pension, current value is circa £126k and I am 41 so do I ramp up contributions then drop off once it hits £200k or just keep it steady for now and trust it will work out? The 21.5% monthly contribution equates to just over £1.5k per month, plenty more income at 40% income tax rate that could be sal sac'd but at the expense of curtailing living standards.... hence my earlier ref to tricky balancing act.