Pension Contribution Question

af1963

artyboy said:

MoneyMan01 said:

Apologies, I should clarify, it's 3% additional from me, which then gets a further 3% from the company. So, 13% total from them, 3% from me, via salary sacrifice scheme. I've updated my opening post. 

Thanks all for the input.

Ok so in that case, for every 58p of take home pay that you sacrifice (up to the 3% matched contribution limit), you get £2 of additional pension contribution - i.e. your £1 gross contribution plus the £1 match from your employer.

if you think you can get a better deal for your money elsewhere, I'd be very surprised indeed!

You do need to pay tax on the pension when you draw it, so that £2 won't all be available to you.  But 25% of it will be tax free and the remainder is more likely to be taxed at 20% in retirement.  So your 58p will still turn into something like £1.70 after tax, almost three times what you give up to pay for it. And that's *without* any investment growth.

If you use the extra pension savings to retire before state pension age, you could get more of it without paying tax, as it may fall within your personal allowance.