what percentage do you pay into pension

[Tempjob]

I'm 40 and I am in the NEST pension scheme, which means my employer pays 3%. I pay 17% of my wage into it each month to top this up to 20% overall, and it is crippling us. My contract ends soon so as part of my job search I am looking at what pension schemes other employers offer. I know the civil service offer a good pension...

Many of my friends are in the USS or TPS which are much much more generous than NEST.

Which pension scheme are you with and how much does your employer pay into it?

I'm civil service and pay in 7.35% (the contributions are tiered so when I was a lower grade I paid in 5.5%). Technically my employer pays in about 22%, but that is essentially irrelevant as it's a defined benefit scheme based on career average earnings and a multiplier. It's a very good scheme.

No idea. I pay into the local government pension scheme but have never paid attention to figures. It's the full rate, not the 50/50 scheme that is offered.

Currently about 20% however it is not all within a pension wrapper.

Pension is a wrapper. In the UK have other wrappers we can also use, such as ISA.

So, I have an employer who uses Nest Pensions. So I do the minimum to that. Nest has a high initial fee on contributions. 1.8% I think on every contribution, then a 0.3% ongoing fee.

I have a SIPP which is low cost, platform fee 0.15% and fund fee of 0.22%

Then I have a S&S ISA which is low cost, same fees as the SIPP.

Be careful comparing schemes as Civil Service, LGPS that sort of scheme are Defined Benefit schemes not Defined Contribution (which Nest is). You are trying to compare Apples to Pears.

USS and civil service are earnings-linked schemes - "defined benefit" plans where the employee knows exactly what pension they are paying for. they often require a lot less contribution from the employee because schemes like this share the risks of the ups and downs of investments over the next few decades amongst all the members and they scheme is balanced so that they can be confident that they will keep their promises.

NEST and most other more modern schemes are "defined contribution" plans - you don't know how much pension you will get, you are taking the risk on as an individual that if the investment grows well you will get a higher pension and if it does badly you will get less. higher contributions help to increase the probability that your eventual pension will be enough to live on. a good rule of thumb is that the total percentage (employer plus enployee) should be about half the age of the employee so at 40 years, 20% is about right.

if you want a better pension deal look at public service employers - doesn't have to be actually working directly for the government but if the wage bill is coming from the tax payer then the pension is more likely to be Defined Benefit. not always, but usually. however often a similar job will have a lower headline salary than it would in the private sector because the whole benefits package including secure pension is more valuable.

I'm not sure if you'd still get a defined benefit civil service scheme as a new entrant, I thought they were all defined contribution these days.

Civil service is generally considered most favourable, but I've seen better offerings, both in terms of pension and death in service benefits from large corporates mentioned, eg banks, insurance, pharmaceuticals, tech sector etc.

Plus in certain occupations, the pay and benefits is likely to be better than civil service, which historically has been lower paid because the pension and flexibility/hours are better.

Most civil service are defined contribution these days for new entrants.

I pay in 5% and employer pays in 10%. This is the max my employer will contribute although of course I can put more in if I wish.

@BarbaraofSeville it's still defined benefit for new entrants, the Alpha scheme isn't as desirable as it once was (career average rather than final salary) but still one of the best.

Unless I'm misunderstanding, I thought career average was still a defined benefit? Sorry if I'm wrong! Still one of the best though, not many employers put in over 20%.

I pay in 9% and employer pays 20% so just under 30% which is fine for now but will need to increase in the next few years to keep in line with wanting to actually be able to live when I retire!

NEST is just a provider, it doesn't dictate how much the employer pays - that is cover by auto enrolment and at the moment is minimum 8% with minimum 3% from the employer.

Defined benefit (particularly final salary schemes where they still exist) are far more valuable than defined contribution schemes.

DB schemes are pretty rare in the private sector now.

For the last couple of years (I'm late 40's) I've contributed >97% of my earnings and approx 70% of my taxable income into my pension.
Prior to this, apart from another single year a few years ago with a large contribution, it was 4% in work scheme + 4% employer matched (max they offer), plus separate contribution into my own personal pension.
Always paid into the personal pension. Started off at £50pm in my early twenties, increased to £200pm at some point then £500pm in my early 40's.

I’m in the civil service pension scheme and I also pay an extra 3% towards an epa which means I can retire 3 years earlier

I'm in a DC scheme in the private sector. They have a very decent pension offering for non public sector and double match contributions up to a max of 10% so I pay 5% and they pay 10% but I do an additional 5% as an AVC so 20% total which I think is decent for my age (early 30s) but I work part time so earnings are lower. I worry about my pension a lot!

I have 32 years defined benefit banked before my employers sold us down the river. Our pension since 2018 is now defined contribution, they put in 13%, I’ve upped my contribution to 50% since April but I’ve no mortgage and I’m 54 so really just piling in as much as I can now.

On a plus side it’s salary sacrifice and I only pay £13 a month tax now 😀

I pay in 3% and employer pays 8%. DH's employer matches contributions, he puts in 10% and they put in 16%. Might be worth considering big companies, financial services, pharma etc I think they often have decent benefits.

Im also defined contribution. I pay in7% and my employer pays in 16% so 23% in total.

9.3% for me

I’ve got roughly 15 years of USS pension at final salary with previous employer plus now have LGPS with new employer which is average salary. I was paying 8.5% into that but it reduces to 6.8% when I go back part time after mat leave.

Career average is defined benefit.
Your pension is based on your pensionable earnings not how much you contribute

For the past couple of years I have paid in 100% of my salary into my DC pension.

I never worked anywhere that had a pension scheme until forced to but I did open my own private one about 15 years ago - I put £100 a month in which, looking back, was way too low and I should have increased it when I got pay rises.

I then had two DC and maternity leaves, returned part time and my contributions were so low- the minimum. We then decided to try to squirrel as much as we could into my pension, my DH is a high earner and so his contributions are subject to the taper.
We also paid off our mortgage which opened up a fair whack of money each month.

I also opened a LISA, so I get more tax relief into my pension and LISA than I actually pay in tax.

I am not sure how long we will be able to manage these level of payments for but it has meant that my pension savings have had a huge boost and makes me feel a little more secure about the future.
A DB pension is the holy grail!

@Mirrorxx do you mind sharing how many years off retirement you were before you started paying the extra to get the 3 year EPA at 3%? Been considering it once I get nursery fees out the way and wanted to take a guess at what % I'd be looking at! Thanks!

@Dinosauraddict I started paying when I was 27 but there is a calculator on the civil service pension website that tells you what percentage it is. I think it was about 2.4% when I started

That's really helpful, thank you @Mirrorxx !

I am the same age as you. Currently pay n in about £10 a month, however, mortgage will be paid off in 11 years so we're planning to put that into savings/ retirement fund. We won't miss it. Just carry on paying it as if we still have a mortgage. Around £500 per month.

I pay 12% and my employer pays 30%.