Passed probation at large corporation, now offered different pension, should I transfer to it?

Simon11

Plus, do you have any children and if so, how many? With child benefit, this brings in additional benefits in bringing your salary down to under £60k bracket.

Albermarle

Mr_X said:

Hi guys,

I'm earning £65k per year and have recently passed probation at a large corporation, with this I am now entitled to a different pension, I’m currently on the company auto-enrolment level but am curious about the ‘Level 3’ option they offer. I am looking for maximum money in my pension but also don’t want my take home to be any less than it is now.

I struggle to understand pension jargon. Please can someone knowledgeable look at the below pension wording and tell me, is it worth moving to Level 3 or just stay on the auto-enrolment?:

 “I would like to confirm that you are contractually entitled to join the Group Personal Pension Plan as a Level 3 member. Please complete the attached Joiner Form and return it to the Payroll Department at your earliest convenience if you wish to take up this invitation. If you have been auto enrolled and are a Level 4 member but wish to transfer to Level 3, please complete the transfer of this form only and return to the Payroll Department at your earliest convenience.

 

The Pension Level differences are noted below:

 

Level 4 (Auto Enrolment Level)

EE's % - Minimum of 5%

Employer will contribute - 3% only.

Employee contributions are based on qualifying earnings, the calculation if you were to make the minimum 5% contribution would be as follows –

Total earnings over £520 but below £4,189 (2025/26 figures) x .05

Employer contributions are also based on qualifying earnings, the calculation is as follows –

Total earnings over £520 but below £4,189 (2025/26 figures) x .03

 

Level 3 (Contractual Entitlement)

The company will match the employee contribution percentage plus 1% to a maximum of 4%.

EE's 1%, Employer will contribute 2%.

EE's 2%, Employer will contribute 3%.

EE's 3%, Employer will contribute 4%.

EE's 4%, Employer will contribute 4%.

EE's 5%, Employer will contribute 4%.

Employee contributions are based on basic salary plus any statutory payments (Maternity pay, SSP etc.), the calculation if you were to make a 3% contribution would be as follows –

Basic salary plus any statutory payments (Maternity pay, SSP etc.) x .03.

Employer contributions are also based on basic salary plus any statutory payments (Maternity pay, SSP etc.), the calculation is as follows –a

Basic salary plus any statutory payments (Maternity pay, SSP etc.) x .04

You may pay more per percentage as a Level 3 member.”

Are  the Level 3 payments are on top of the Level 4 payments, not instead of ?

Otherwise with Level 3 the first two options only give a total of 3% and 5% which is below the legal minimum .

Bostonerimus1

cfw1994 said:

Secret2ndAccount said:

As a level 4:
Each month, you contribute £183 and your employer contributes £110

Opt for level 3 at 3%
Each month, you contribute £162 and your employer contributes £217
Or you could go to 4% and pay in £217 yourself, still matched by £217 from employer.

So yes, you should opt for Level 3.

Future you will always thank you greatly for putting more in early.  

You currently put 5%, employer 3%, so go with Level 3 and continue to put 5% in…gets a bit more from your employer, & makes your contribution 9%.

You don’t mention your age, or what you have already in pensions built up…..MSE broadly suggest half your age in % terms, so if you are 30, you ought to try to get 15% (in total) in.  On Level 3 that would be the 4% employer part plus 11% from yourself.  

Definitely put as much into tax advantaged wrappers as possible. So that includes your pension and an ISA. Your future self will thank you.  One thing I did was I put every annual wage increase into my pension and other investments. I used them to compound and pay myself in the future.