How much should I ask my employer to contribute to my pension?

[NotyouagainWilliam]

I started a thread in AIBU and someone Pm'd me to say there was a Money Matters board!

I'm mid 50s and in a panic about my pension. I earn 65k pa and am salary sacrificing 25% into auto enrolment. My employer pays 3% and (as I'm Senior Management) want to ask them to contribute more but don't know what I should be aiming for.

Any advice would be much appreciated.

Can you ask them to contribute more? I thought it would be whatever was in your contract?

Pension contributions are unlikely to be negotiable in the same way salaries are so unless your company can afford to up it for everyone then I think you are on a hiding to nothing.

3% is what they are legal obliged to contribute so they may well take the view that this is all they need to offer.

If you think they will be open to offering an enhanced pension contribution to you then this article gives a sense of the average contribution by sector (some will have changed as the auto enrolment figures now require more than this). This might help you benchmark how they compare to other similar companies.

www.profilepensions.co.uk/blogs/generous-workplaces

I tried this and didn’t get anywhere as it’s standard for everyone. They increased my salary so I could increase my own contribution. 3% is the minimum so doesn’t say great things about the company- wild you move ?

Pensions are just one form of a retirement plan. You should be making use of stocks and shares ISA allowances too. In fact I imagine at 50 these will probably grow faster than a pension would.

Go to the hl.co.uk website and start swotting up about their top funds

I doubt they will change it, you can ask for a salary increase and Chuck that into the pension.

My firm goes on a sliding scale to a max of 10%.

How much do you have in pensions at the moment? Have you worked out how much you will need when you stop working full time, and how much income you will get then from state pension, other investments, other income sources, etc.. and then worked out how much you need from your pension. Working back from that will give an idea of how much you need in your pension pot. Then you can work out how much you should pay in

Thanks for replies.

Actually, I SS £15kpa.

Two years ago before I upped my contributions I had £60k in pension. State retirement in 13 years time.

So, with employer contributions and a bit of growth you’ll have around £100k I would guess in your pension. Another 13 years of contributions will add another c£225k, so c£325k without growth. At 4% withdrawal rate and assuming full state pension, you are looking at gross income of around £22k. In all probability higher, as there will be growth in your pension.

Is that enough to live on, taking into account what you think your costs will be?

Is that enough to live on, taking into account what you think your costs will be?

Not really. I'm looking for £30k.

Should I start a S&S ISA?

Do you have any other savings apart from the pension? If so, how much?

Is 30k the minimum you need? Usually when you stop working full time, what you need to live on goes down, have you factored that in to your thinking?

@Ozanj

Pensions are just one form of a retirement plan. You should be making use of stocks and shares ISA allowances too. In fact I imagine at 50 these will probably grow faster than a pension would.

Go to the hl.co.uk website and start swotting up about their top funds

I'm not sure that this is true (that ISA will grow faster than pension) the ISA or pension is just the wrapper. They can both contain exactly the same investments and it is the underlying investments that will provide the growth. Indeed for pensions you will have the tax relief invested and growing (or shrinking...) too so if anything the pension will be likely to grow faster. Of course the pension will be taxed on the way out whereas the ISA will not.

Don’t forget the state pension in your calculations too.
A full state pension if you have 35 years of contributions is over £9k in current money terms and is inflation linked. You won’t be able to get that until state retirement age.

£30k is a high target for retirement income. Most sources suggest around £18k is needed for a reasonable retirement for a single person and about £27k for a couple. Remember you won’t be paying these vast sums in pension contribution any longer, nor your hefty taxes and national insurance contributions. In your case, these are probably taking a coupon of grand per month in themselves.

My DH and I have just retired with pots worth 1.4 million. It works at about 50k a year plus some fun money for holidays etc and then we’ll get state pensions but not for another 12 and 15 years. I don’t think you are on track for anywhere near a 30k a year pension.

Thanks for replies.

My DH has a good pension pot but if he dies after he's 75 I'm not sure what happens to it. Hence I'm trying to get a better one for myself.

Would depend on the type of pension he has, do you know, if not ask him and find out