How much should I put away in my pension?

[StopTheSundayBlues]

I'm looking for some advice. As of next month, I start the Work Place pension scheme and will be putting money away into it every month.

For context, I am age 20 with 1 dependent. I work around 40 hours a week. My salary is £30K gross.

I really have no idea where to start. I have been advised that I can have someone come in to professionally chat to me about options, perhaps that would be worthwhile?

Does your employer match your contributions? Mine does, meaning that if I contribute 10% of my gross salary, they put in 10% as well.

For this reason I make sure the minimum I contribute is 10%. I'm very fortunate to be in a financial position to be able to do this.

Half your age on starting. So if you start at age 20 then make a 10% contribution

An often used yardstick is half your age as a percentage of salary. So if you're 20 and earning £30k, you'd be looking at 10% of £30k, i.e. £3k per year, but that's total of both your personal and your employers contribution, so if the employer is paying, say, 3% of your salary, then you need to top it up with the other 7%.

But another school of thought is simply "whatever you can". It's highly likely there won't be a universal state pension when you retire (it'll all be means tested), so you really have to assume you need to make your own provision.

And another option is to load as much as you can into tax free ISAs when you're young, so at least you retain control and can use it as a deposit for a house if you need to (there are also special savings schemes for saving to buy a home). If you do that, you just have to remember you'll have to dump more into pensions at a later stage - back to the first calculation - if you don't start your pension saving until you're 40, you'd need to put in 20% of your salary (again combined employee and employer) to get anything like a half decent pension.

That all assumes retirement at normal state pension age. If you want to retire early, then you have to save a lot more.

If it's matched, at least the maximum matched by your employer.
Even then, if you can, put more in as this not only builds your pot up, but also reduces your taxable income.

Another thing to consider (what I do) is that when you get a payrise, discount it from your life. Continue living on your existing budget as you already have been and sweep every extra penny into the pension so your take-home remains the same. You won't miss what you never had, but it'll be sat there for later on.

My employer does match the contribution, yes.

I am mortified to say I know next to nothing about pensions, however, my main worry is someone coming along, changing the rules and everything I've saved being scraped

Maybe a silly worry, but a worry none the less.

I know nothing about pensions either. All I know is they payments of around £120 a month are taken off me for pension.

I know nothing else 😂 I don't know how much my employer puts in on the back of it.

I'm in the Northern Ireland Civil Service so should be easy to find out but I just cannot understand pensions 😂

A good starting point for some research.

www.moneysavingexpert.com/savings/discount-pensions/

I think historically people put a lot less into pension funds than we need to now. There is less growth from investments and state pension are later and smaller.

I would opt for a minimum of 10%, assuming your employer will match this. More if they won't.

I think the issue with putting away 10% is that I simply can't afford that.

10% would be £200 per month. However, I see a major temptation there since my employer will match it and it'll be £400 in total put away...

10% would be £200 per month

I think that your contribution would be gross meaning that the amount you lose from your net salary would be 80% of that, ie £160. Paying £160 to get £400 into your pension seems worthwhile even if it's a push.

(I might have got this completely wrong.)