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How much do you pay into your pension as a percentage of your salary?

(37 Posts)

DH's new employer pays in 7% and we're also paying in 7%. We're both 30. I'm a self-employed tutor so my teacher's pension isn't getting anything at the moment. We don't know whether to pay more into his to make up for the fact that mine's not being fed. I earn very little (less than £10k a year) and he earns £39k. After child care vouchers, tax, NI and 7% pension his monthly income is under £2k a month. Mine varies a lot-sometimes it's only a couple of hundred and sometimes more depending on the time of year. We are on a tight budget so to lose any more of his salary to the pension would make life quite tough but I'm worried about it being even tougher when we're old!

Around 7% I think (local authority)

TalkinPeace Wed 12-Feb-14 18:52:09

if you are in the LGPS your employer alsp pays in 19.8% of your salary

only at those levels (nearly 1/4 of earnings) will pension contributions lead to a decent income later

so people putting away 2 or 3 % with fees on the fund running at up to 1.5% of the fund every year are in for a rather nasty shock when they stop work

Quinteszilla Wed 12-Feb-14 18:55:45

Do you calculate this from the gross or the take home salary?

Dh is currently considering two employment offers. One matches his contribution up to 5%, the other matches his contribution up to 8%.

I am trying to figure out whether this will be taken from the net or gross figure (we have never had a pension before!!)

TalkinPeace Wed 12-Feb-14 18:56:24

gross

Leviticus Wed 12-Feb-14 18:56:40

I pay 16.25% (12.25% standard + 4% additional voluntary contribution to retire a bit earlier). Employer does not disclose how much they pay except it is 'significantly over' 11%.

Quinteszilla Wed 12-Feb-14 19:06:45

So if he gets 6.5 k per month, at 5%, that will be £325 subtracted from the net figure, so just under 3900 net? Just using hypothetical figures.

Will the government add any to this?

TalkinPeace Wed 12-Feb-14 19:09:56

no, the employer does

Notmadeofrib Wed 12-Feb-14 20:38:55

The calculation is from the gross salary but the amount is taken either from the gross or net depending on the type of pension.

If it's a PP the government gross up by the basic rate of tax and pay that to the pension provider, furthermore your basic rate tax band is increased by the pension contribution to refund any higher rate tax. (So yes you get the tax back but it's not going to make it higher than say the 5% of the gross salary).

Not all pensions are equal.

Talkinpeace each I know you hate pensions, but 1.5% charges is a misleading figure for many post RDR pensions. I know not many are going to be that up to date, but many employer run schemes will have been changed, or will be changed quite soon. People should check the terms and try and influence decision makers. The old stakeholder pensions are frankly out of date and they are the 1.5% contracts. I write 0.4 & 0.6% contracts every day of the week. (Large funds will buy you 0.2% charge).

TalkinPeace Wed 12-Feb-14 20:47:41

Notmade
I quite agree that the new schemes are better, but the fact that the industry blocked the cap last month speaks volumes

and you talk about large funds ...

my limited company has one employee ... me
DH's limited company has one employee .... him

my other employer has six employees, 2 already in a scheme, one over 65, one earning under £4000 a year and 2 eligible for NEST scheme

a goodly proportion of employers have less than 10 employees, many of whom are part time
which schemes are offering dirt cheap rates to employers with less than five employees ?
of whom there will be tens of thousands in the next few years

I pay in 15.8% and my employer pays 2%, but this will be going up in April to 6%. It's just a stakeholder one, but I've been averaging 17% since I was 23, so am hoping I won't be too skint when I retire...

Lonecatwithkitten Wed 12-Feb-14 21:00:18

I am self employed and total amount in is 16.7% of my income. I have paid in nice the day I started work at 24. However, I have had very smart advice and have a SIPP that owns one of my business premises and that rent is 60% of that contribution.
I then have a WRAP as well. Due to good a advice my pension has quadrupled in 5 years. It is not just how much you put in, but what you do with it.

PrincessOfChina Wed 12-Feb-14 21:08:37

I pay in 8% and the company pay in 8% I think. DH has no pension (he's consistently worked for tech start ups and we think private pensions are a total waste at the level we can afford to invest).

My pension is a kind of final salary thing. Not sure of the name.

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