What % of salary do you put in your pension per month and why?

Bald93

Age 30
Salary Sacrifice 10% 
Employer Contributions 4%

Pot is currently 18.8k

Employer doesn’t increase based on higher contributions, 4% is their standard. I think this relates to primarily to being a US company and adapting to the UK market.

Started with Auto Enrolment in 2015, but have only increased of minimum rates in the past 3 years as a result of pay rises. 

Intent is to always increase my contribution after a pay rise, normally by a single percentage depending on the increase. 

Mortgage has 22 years remaining currently but that being cleared will trigger a major contribution increase. 

Albermarle

ZeroSum said:

sevenhills said:

Albermarle said:

The main difference is between DB schemes ( mainly public sector nowadays) where the employer contribution has to be in the region of 20 to 30% to fund the scheme, so it can meet its liabilities.

DC schemes can be as low as 3% from employer, or 20% + in some rare cases. No idea what the average is - 5 or 6% % ?

I don't think the average will be as high as 25%, I believe my local authority put 16% in to my pension.
Perhaps the rate is higher for higher rated jobs, but that wouldn't be fair?

The employer conts are the same rate regardless of salary. Employee conts do increase with higher earners. The one I work for is about 19%

I've seen many of the schools that have converted to academies with 20%+ employer pension conts

With the private sector scheme I was in, the DB pension was stopped about 20 years ago. However the employer is still having to add significant amounts to it every year to keep it afloat ( as well as adding to new DC scheme) So it must have cost a lot over the years,

thebikemechanic

Age: 37
Current DC pot value: £7.5k
My contribution: 5%
Employer contribution: 3%
Sector: Specialist Retail & Service

At minimum contributions at the moment as employer doesn't offer any kind of matching. However, wifes pension is much more favourable, so she pays higher contributions and I bring home more 'take home pay' for monthly expenses. Household pension pots combined are at c£60k. 

Both will increase in coming years, but at the moment we're just out of the other side of maternity leave period and saving for essential home renovation - which is part of the retirement plan as we try to pay off mortgage by 50 and do renovation taking on minimal additional debt. 

noclaf

Employer total contribution is 11.5%, I contribute anywhere from 9% lowest all the way upto 17%....have gone higher during bonus months but that's very much on ad hoc basis rather than every year.

As to the why, I am 41 and total pot is £140k, don't know wife's total pot(s) yet so working on that basis I need to achieve at least a £500k pot by retirement to try to mitigate a stressful and struggling retirement....no guarantees in life and we can't control everything so whilst I can take advantage of the pension I shall do so.

The rest goes into monthly expenses, savings and S&SISA...large outlay needed next year for home renovations on once that is out the way focus will be fully on continuing to build up pension and S&SISA.

chucknorris

100% of what I can because its the best value option to me, I invest most of it in buying additional pension in the TPS, and what is left over from my 'relevant income' I invest in my SIPP. 100% of what I can is 91.4% because I contribute 8.6% for my accrued pension of the TPS.

So you could say 100%, because the 8.6% is also being paid into my pension. I have been doing this since I was 52 years old, I am 65 now, and will retire on or about my 66th birthday in January.

Futuristic

I think it would've been good to include rough age (eg. 20s or whatever) to see if people are paying in the "half the age" metric

I'm in 20s but didn't pay into my pension for few years as I didn't know director benefits and have caught up to work out to about 35% of my salary since I started. One of the benefits of a director is this is additional on top of my salary from the company

It's basically break even since buying near top and averaging down and thinking of slowly down yearly contributions by quite a lot and just let the cash sit on 4-5% saver in the company

daz378

6.5 %....or 160 /170  a month lgps...not sure how much my employer contributes...also 50 pound a month stocks and shares  isa..medium risk and  30 a month credit union.  ..as well as savings account with moneybox 30 a month

TheAble

Age 40/about 20%/350k. Aiming to retire at 50.

With bonus I earn around 125k so the idea is to bring myself down to 100k to avoid the 62% marginal rate. I'm fortunate in that my employer provides a very flexible SS scheme, so I sacrifice the max I can (subject to meeting minimum wage) for a few months of the year to take advantage of the higher NI bands (thanks to the folks on here for this tip btw).

Ironically were it not for the various tax cliff edges I've gone past down the years (first child benefit higher tax charge, now this 62%) I'd more likely have a much smaller pot, be working for longer and pay a lot more tax overall. I'm not saying I've got these policies to thank but it does show the disincentive effect they have, in my case at least.

george4064

TheAble said:

Age 40/about 20%/350k. Aiming to retire at 50.

With bonus I earn around 125k so the idea is to bring myself down to 100k to avoid the 62% marginal rate. I'm fortunate in that my employer provides a very flexible SS scheme, so I sacrifice the max I can (subject to meeting minimum wage) for a few months of the year to take advantage of the higher NI bands (thanks to the folks on here for this tip btw).

Ironically were it not for the various tax cliff edges I've gone past down the years (first child benefit higher tax charge, now this 62%) I'd more likely have a much smaller pot, be working for longer and pay a lot more tax overall. I'm not saying I've got these policies to thank but it does show the disincentive effect they have, in my case at least.

Is it correct that income tax is adjusted so you're taxed the correct amount over the whole tax year, whereas NI contributions are looked in isolation on a monthly basis.

Hence there are NI savings to be had if you can make lumpy SS pension contributions for a few months then lower conts throughout the rest of the tax year, but income tax savings are the same (compared to average contributions each month)?

Also, do you only benefit from this method if your employer shares some of the NI savings they make?

TheAble

george4064 said:

TheAble said:

Age 40/about 20%/350k. Aiming to retire at 50.

With bonus I earn around 125k so the idea is to bring myself down to 100k to avoid the 62% marginal rate. I'm fortunate in that my employer provides a very flexible SS scheme, so I sacrifice the max I can (subject to meeting minimum wage) for a few months of the year to take advantage of the higher NI bands (thanks to the folks on here for this tip btw).

Ironically were it not for the various tax cliff edges I've gone past down the years (first child benefit higher tax charge, now this 62%) I'd more likely have a much smaller pot, be working for longer and pay a lot more tax overall. I'm not saying I've got these policies to thank but it does show the disincentive effect they have, in my case at least.

Is it correct that income tax is adjusted so you're taxed the correct amount over the whole tax year, whereas NI contributions are looked in isolation on a monthly basis.

Hence there are NI savings to be had if you can make lumpy SS pension contributions for a few months then lower conts throughout the rest of the tax year, but income tax savings are the same (compared to average contributions each month)?

Also, do you only benefit from this method if your employer shares some of the NI savings they make?

Yes this is exactly it: NI calculated monthly (weekly?) whereas income tax annually. So rather than just eat into the 2% NI you take a bite out of the 12% as well.

You benefit from this irrespective of employer passing on their savings, although obviously if they do pass on it's a nice kicker. The method doesn't really have any impact on the employer element though since they pay a flat 13.8%.