Non contributory pension question

dancingfairy

Hi. I am just about to sign a contract for my first real job. In my contract it says there is a non contributory pension.
The agency have told me that I have to make all contributions as the employer will not contribute.
However this seems the opposite to what I have found on the internet - which is the employer pays it and I don't have to contribute.
Obviously I am totally confused. I have been told by the agency to sign the contract anyway and ask on my first day. Obviously though it would be good to have some idea what action I need to take towards the pension or not.
I want to know whether this pension non contributory is likely to be sufficient or whether I will need to take out an additional pension somewhere else to suplement it.
I will be on a good wage £18k and am keen to start my pension and have little financial responsibility at the moment so would be happy to contribute to another pension if this is necessary. I'm 25 if that helps.
Many thanks for any advice.

EdInvestor

Typically a "non-contributory" pension means that the company pays in but you don't. Very desirable.

All companies are require to offer the facility to open a pension to all employees, but for many smaller companies this amounts only to providing leaflets about a stakeholder pension at an insurance company and the deduction/onpassing of your contributions - there is no employer contribution.

Suggest you get the agency to check as it's potentially an excellent benefit.

dancingfairy

To be honest I am going to sign the contract anyway and talk direct to company when I start. The pension sounds good and it is within the financial services industry so that wouldn't surprise me.
Does this mean I get to add to the pension if I wanted ? or would I need to start my own seperate one? is this something it would be worth me doing?
I appreciate you can't give a defnitive answer as you don't (and I don't have all the details yet) but a rough guide would help.
Thanks

chesky369

Does this mean I get to add to the pension if I wanted

Nowadays I think you'd be hard pushed to find a scheme that allowed you NOT to.

dancingfairy

Cool. Thanks. I have signed the contract. Hopefully I will get all the literature next week so I can decide how much (if any) to contribute. I don't want to rely on a final salary alone, if that makes sense so will see what it is invested in and how it all works.

EdInvestor

dancingfairy wrote: »

. The pension sounds good and it is within the financial services industry so that wouldn't surprise me.

In that case it's very likely to be a proper one, it's a typical long standing perk in financial service companies.

chesky369

I don't want to rely on a final salary alone

don't rush into contributing extra into this scheme; take some advice before you do, there are lots of alternatives nowadays.

dancingfairy

Thanks. What sort of options are available to me? I'm guessing ISA, but don't really know of any of the others. What should I read up on? I want to be as well informed as possible if I go and see an Adviser. How much wouldI be looking to pay for advice on what sort of pension to go for? I live in Guildford so a rough price range would be great. P.S I think I would like to pay for the advice seperately and not have the fee taken off any money I invest.

EdInvestor

The first thing usually recommended is to accumulate a cash emergency fund, via a cash ISA.After that it may be best to go for the "other half" of the ISA - the stocks and shares part.This enables you to invest tax free in the same way as you would in a pension - in shares or funds - but without the restrictions of the pension wrapper.You don't get tax relief on the way in, but you can take everything out whenever you like free of tax, unlike the pension.

Given that you might need the money for a house deposit at some stage, and you have the non-contrib company pension, this would be the best way to go IMHO.

Use a discount broker to open the S&S ISA to cut costs. eg www.h-l.co.uk

dancingfairy

Thanks. This is how I have decided to divide my income up so far. I know I haven't covered everything but anything I want will come out of miscelaneous spending or bills.
Income 1065.383333


Rent 350
Council Tax 50
Food 100
Bills 50
Travel 60
Overdraft 50
Australia 125
House fund 120
Miscelaneous 220.3833
Total1065.383

Rent this covers my half as does food and bills and ct, travel is likely to be my travel to work on bus (worst case scenario) as should be able to get weekly/monthly tickets.
Overdraft is saving up to pay back £500 of my interest free student overdraft for when it stops being interest free in June next year. Already have this years repayment saved up.
Australia is to pay for a holiday to visit my OH's family in Australia who he hasn't seen for 10 years and I have never met.
House fund - is for a house deposit in 2/3 years time hopefully. OH will be saving up too.
This was in addition to £100 set aside to put into a 'pension' (or ISA ) of some kind.
The rest is left over for me to spend on clothes/nights out/ entertainment etc, but I doubt I will be spending anywhere near that amount. I hope to keep it under £150. Although I am trying to train myself to spend some money after spending 4 years at uni trying to not spend too much.

What do you think? I am 25 graduated from uni last year, this is my first proper job and I want to plan for the future but also enjoy a bit of money as well.

EdInvestor

Yep, all looks good to me.