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  • FIRST POST
    • Gazz_
    • By Gazz_ 8th Mar 18, 10:29 PM
    • 2Posts
    • 0Thanks
    Gazz_
    A couple of questions regarding pensions
    • #1
    • 8th Mar 18, 10:29 PM
    A couple of questions regarding pensions 8th Mar 18 at 10:29 PM
    I am 33 years old and have never had a pension before, but have recently been automatically enrolled by my employer.

    My knowledge of pensions in general is rather limited but I have been reading some of the literature on this website to try and clear things up.

    I am currently paying less than 10 for my pension but think that I should be contributing more. I recently came across this quote from this website:

    "Basic-rate taxpayers: Because your pension contribution comes out of your pre-tax salary, you'll pay less income tax at 20%. You'll also avoid your 12% NI contributions on the amount you sacrifice. This means for every 68 you sacrifice from your pay packet, 100 goes into your pension pot."

    Does this mean that once I turn 55 years old I would have (100x22yearsx52week) around 114k in my pension pot? Or would there be more, or less? (with inflation, etc).

    How would I go about increasing my pension? Do I need to ask my employer or do I need to contact the pension provider?

    Can my employer refuse to increase my pension if I decide to increase it too high?

    How much will they contribute? I've heard that some employers match your contributions.

    If I decided to increase my pension contribution to 68 for example; will this stay the same over time, or would I need to consistently be increasing it, every couple of years or so?

    And how can I be sure that I'm staying within the limits so that I do not get taxed on the money going in?

    Thanks in advance.
Page 1
    • Brynsam
    • By Brynsam 8th Mar 18, 11:34 PM
    • 916 Posts
    • 602 Thanks
    Brynsam
    • #2
    • 8th Mar 18, 11:34 PM
    • #2
    • 8th Mar 18, 11:34 PM
    Does this mean that once I turn 55 years old I would have (100x22yearsx52week) around 114k in my pension pot? Or would there be more, or less? (with inflation, etc).



    You need to take into account the effect of charges on the money going in; and the investment return (hopefully the latter will far exceed the former), so you should have well in excess of that if you are paying 10 a week - and you don't seem to have factored in any employer contribution, which will also increase your pot.

    You should have been given details of your scheme and a contact number for further information. If you haven't, ask your employer. That should enable you to answer the rest of the questions you have posed - it isn't possible to answer them without more information.
    • AlanP
    • By AlanP 9th Mar 18, 10:00 AM
    • 1,177 Posts
    • 850 Thanks
    AlanP
    • #3
    • 9th Mar 18, 10:00 AM
    • #3
    • 9th Mar 18, 10:00 AM
    I am 33 years old and have never had a pension before, but have recently been automatically enrolled by my employer.

    My knowledge of pensions in general is rather limited but I have been reading some of the literature on this website to try and clear things up.

    I am currently paying less than 10 for my pension but think that I should be contributing more. I recently came across this quote from this website:

    "Basic-rate taxpayers: Because your pension contribution comes out of your pre-tax salary, you'll pay less income tax at 20%. You'll also avoid your 12% NI contributions on the amount you sacrifice. This means for every 68 you sacrifice from your pay packet, 100 goes into your pension pot."

    Does this mean that once I turn 55 years old I would have (100x22yearsx52week) around 114k in my pension pot? Or would there be more, or less? (with inflation, etc).

    NO - The value of your pot will be whatever the underlying value of the investments in it are. Your contributions, and your employers, are used by the pension company to invest in company Shares / company and Gov't Bonds etc.

    Over time you can reasonably expect these to go up in value but with zig-zags along the way. For example, markets are about 8/10% down so far this year which has taken them back to the level they were at in Autumn last year.


    How would I go about increasing my pension? Do I need to ask my employer or do I need to contact the pension provider?

    As it an employer scheme using Salary Sacrifice to avoid NI then yes it would be your employer you need to ask.

    Can my employer refuse to increase my pension if I decide to increase it too high?

    YES - You can't Salary Sacrifice below National Minimum Wage or the employer would be breaking the law.

    Not sure if you appreciate what Salary Sacrifice means so jsut in case. Instead of your employer paying you 500 per week they are paying you 400 per week and putting 100 per week into a pension on your behalf (made up numbers).

    So for the purposes of applying for a loan, C/Card or mortgage for example your wages would be 400 per week not 500 per week as you never get paid that extra 100


    How much will they contribute? I've heard that some employers match your contributions.

    By law all employers have to contribute something,
    some match (up to a limit) some don't, some pay more in than you. Ask your employer if it isn't clear in documentation you have


    If I decided to increase my pension contribution to 68 for example; will this stay the same over time, or would I need to consistently be increasing it, every couple of years or so?

    Given your age and lack of pension to date the more you can save going forwards the better. What I have done in the past is put my contribution up with each pay rise

    And how can I be sure that I'm staying within the limits so that I do not get taxed on the money going in?

    You can pay in the MAXIMUM of your Salary or 40k in simple terms. Salary Sacrifice complicates this a bit. If you are up near that sort of level put the details on here and we can advise but if you are thinking about 100 per week you are well within the limit.

    Thanks in advance.
    Originally posted by Gazz_
    Hope that helps, ask if any further queries.
    • Brynsam
    • By Brynsam 9th Mar 18, 10:04 AM
    • 916 Posts
    • 602 Thanks
    Brynsam
    • #4
    • 9th Mar 18, 10:04 AM
    • #4
    • 9th Mar 18, 10:04 AM
    Even if you can't pay more using salary sacrifice, you should be able to pay more by making contributions out of your pay (you'll still get tax relief up to certain limits - your scheme booklet/employer/pension provider can tell you more).
    • IanSt
    • By IanSt 9th Mar 18, 10:23 AM
    • 260 Posts
    • 193 Thanks
    IanSt
    • #5
    • 9th Mar 18, 10:23 AM
    • #5
    • 9th Mar 18, 10:23 AM
    I am currently paying less than 10 for my pension but think that I should be contributing more. I recently came across this quote from this website:

    "Basic-rate taxpayers: Because your pension contribution comes out of your pre-tax salary, you'll pay less income tax at 20%. You'll also avoid your 12% NI contributions on the amount you sacrifice. This means for every 68 you sacrifice from your pay packet, 100 goes into your pension pot."

    Does this mean that once I turn 55 years old I would have (100x22yearsx52week) around 114k in my pension pot? Or would there be more, or less? (with inflation, etc).
    Originally posted by Gazz_
    There might be a miscalculation here - I think most people pay into their pension on a monthly basis rather than weekly, so if a gross sum of 100 was going into your pension then you're likely going to be contributing just under a quarter of that value i.e. 26,400.

    As others have said, the actual sum in your pension would then depend on how your funds have performed and the charges made.
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