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Original poster

Pension contributions

151 replies

bonzaitree · 17/10/2022 13:38

Hi all,

Just wondered what percentage you pay into your pension? Would also be useful to know your age for context and whether you work in public or private sector.

I've just moved jobs so have to make a decision. I work in the private sector and my employer contributes 5%.

I am a saver so want to add a lot more into my pension, but we are saving for a new home deposit at the moment so just trying to balance it out.

I am early 30s.

OP posts:
wobytide · 18/10/2022 11:24

Weirdlynormal · 18/10/2022 09:46

@Discovereads

Read the NHS accounts: www.nhsbsa.nhs.uk/sites/default/files/2021-01/Resource_Accounts_2019-2020.pdf. My statement above was taken from here, not some random Google effort.

This is also from the TPS:www.teacherspensions.co.uk/members/search/-/media/92e8b272f12e46438a80d2fdc429ce03.ashx

You are misinformed, but writing this stuff as fact. I have 15 years as a Chartered IFA with every pension qualification available to us. I advise members which is a legally constrained profession and requires me to be on an FCA register.

For what it’s worth, schemes hold about 9 months worth of liabilities. Not underfunded, but UNFUNDED.

So even though I highlighted that high employer contributions are required because of the liabilities they've saddled their schemes with and you've provided examples how was what I said inaccurate?

DB schemes with employers contributing 30% or higher are blatantly ones that haven't managed their liabilities, even with 20%+ contributions it's hardly a glowing endorsement

JustGotToKeepOnKeepingOn · 18/10/2022 11:39

The main reason I took the job I'm in is because If I pay 8% in to pension the employer pays 12%.

StarfishBrain · 18/10/2022 12:05

RoseLemon · 17/10/2022 21:49

Grrr public sector pensions wind me up too and I agree with @Oblomov22

I disagree with the comment about salary levels being better in private (sorry can't remember who said that) as that's very often not the case. And even if it were the long term benefit of gaining a defined benefit public sector pension is huge. There may be less final salary public sector pensions nowadays but even the current move to career average is still massively generous as they are paid forever. Private sector pensions are generally defined contribution which means you either buy an annuity (the rates are horrific) or you invest the money and withdraw as you go along but when it's gone it's gone. There's no forever payout. I can't be arsed to dig out the calculations but the rate at which a person has to pay into a DC pension to get the same benefit as a DB public sector pension is eye watering.

Yes the quoted pensions are insane.

But they won't be paid at the levels promised, sadly. Many are unfunded schemes - ponzi schemes like the state pension so no more than a promise from the Government, and we know what that is worth!! - so are not personal money being invested in a personal retirement investment.

It's a ticking time bomb alongside the ageing population etc and many in the public sector won't get anything like what they are expecting in the end because it's simply impossible for the country to fund it.

Politicians of course pretending this is not an issue because it won't bite in the next 2 years, or the 4 years after that. The bomb will be passed around until it explodes, same as the obvious energy crisis that was going to come.

daisychain01 · 18/10/2022 12:12

RoseLemon · 17/10/2022 21:49

Grrr public sector pensions wind me up too and I agree with @Oblomov22

I disagree with the comment about salary levels being better in private (sorry can't remember who said that) as that's very often not the case. And even if it were the long term benefit of gaining a defined benefit public sector pension is huge. There may be less final salary public sector pensions nowadays but even the current move to career average is still massively generous as they are paid forever. Private sector pensions are generally defined contribution which means you either buy an annuity (the rates are horrific) or you invest the money and withdraw as you go along but when it's gone it's gone. There's no forever payout. I can't be arsed to dig out the calculations but the rate at which a person has to pay into a DC pension to get the same benefit as a DB public sector pension is eye watering.

You'd be pissed off on a daily basis then at the thought of some of my colleagues who have been in the Civil Service for over 30 years. And even more so at the fact that it's very common for a husband and wife to have both been in CS since leaving school at 16 yo and then meeting each other at work.

Chewbecca · 18/10/2022 12:23

I think the question of whether the public sector salaries are lower or not varies a lot regionally. I live in a commuter town, but quite a long commute. The local public sector salaries don’t compare to London salaries but are the best local salary you can achieve.

Problem is, people working in the private sector need to use the extra salary earned over their working lives to save more than public sector workers do into private pensions / investments but this isn’t realised until far too late in life.

confusedlots · 18/10/2022 12:34

Early 40's and I pay in 10%, employer pays 22%.

OperaStation · 18/10/2022 12:37

You should open a lifetime ISA if you haven’t already. It’s up to £4k per year and the govt tops it up by 25%.

RoseLemon · 18/10/2022 13:09

@Chewbecca agree with you post about salaries differing regionally, commutes etc but your second paragraph really nails it.

On the face of it private sector salaries can often look better but the devil is in the detail, and as you say many people don't realise that any differential in salary needs to go into a pension and many, myself included, don't realise this when young.

I do think government pensions are unsustainable and heading for disaster as @StarfishBrain said and politicians don't want to tackle it as it would be hugely unpopular, but the impact in future for those former employees is worrying.

twistyizzy · 18/10/2022 13:18

Chewbecca · 18/10/2022 12:23

I think the question of whether the public sector salaries are lower or not varies a lot regionally. I live in a commuter town, but quite a long commute. The local public sector salaries don’t compare to London salaries but are the best local salary you can achieve.

Problem is, people working in the private sector need to use the extra salary earned over their working lives to save more than public sector workers do into private pensions / investments but this isn’t realised until far too late in life.

What extra salary though? I haven't had an increased salary from working in the private sector.

Northumberlandlass · 18/10/2022 13:29

Private Sector & 50 - I put in 20% and employer 15%
I had a DB but that stopped, I now have DC. My DB is frozen so I will receive annual amount when I turn 65. They also upped my pension age when they stopped the DB. I will take a view as I approach 60 (scarily not that far away)

Chewbecca · 18/10/2022 13:32

twistyizzy · 18/10/2022 13:18

What extra salary though? I haven't had an increased salary from working in the private sector.

Show quote history

I know it doesn’t feel like it but for the equivalent role, if, say you are an accountant, chances are you are paid more in the private sector than you would be in the public sector. That’s a choice you make and you do need to put some of the extra income aside to compensate for your lower company pension.

Chewbecca · 18/10/2022 13:35

The average public sector accountant is paid £10-£15k more than the average private sector accountant according to Google.

twistyizzy · 18/10/2022 13:37

Chewbecca · 18/10/2022 13:32

I know it doesn’t feel like it but for the equivalent role, if, say you are an accountant, chances are you are paid more in the private sector than you would be in the public sector. That’s a choice you make and you do need to put some of the extra income aside to compensate for your lower company pension.

Show quote history

Unfortunately for my sector no there isn't a public alternative and yeh OK maybe that was a choice of career but at 21 yrs old you don't choose a career path based on pension. Maybe we should do though? For many people there isn't any "extra" left to put aside due to lower wage. I also need to add I have a degree and a post grad degree but still earn just above national average wage. Up until a few years there was zero room in my salary for adding anything extra to my pension.

Dougieowner · 18/10/2022 14:02

After they closed our final salary (DB) scheme a few years ago my employer (private sector) brought in a retirement / savings (DC) scheme.
They are paying in 13% and I have always paid in more than the minimum contribution (6%), this started off at 20% but is now in excess of 40%.

Glad I have been doing so as although the scheme is currently in the doldrums I am banking on it (and my old DB scheme) to fund an early retirement (late 50's).

WombatChocolate · 18/10/2022 17:21

To people thinking about contribution percentages they out in and their employers and comparing public and private sector…..

Remember those in public sector defined benefit pensions don’t have a PENSION POT. It’s not like the orivate secotr Defined Contribution system where the pot grows.

Defined benefit pensions state what your pension will be with a formula based on service and salary….not contributions. So contributions can change (and do) but the amount of pension received doesn’t.

For example, in the civil service, with current pension arrangements, the worker sees their ANNUAL pension (not a pot to fund a lifetime of pensions ) grow by 1/43 of their annual salary. Some workers pay more and some less for this, as %s of employee contribution vary according to salary with the higher paid paying greater %s. And there is no choice about the percentage workers pay. They are in or out of the basic scheme.

MsPincher · 19/10/2022 15:47

Discovereads · 18/10/2022 09:34

They can’t be unfunded because they’re literally funded by salary sacrifice contributions. It’s not like these pensions are free to employees.

Unfunded in pensions context means there is no pot of savings to back it up. It’s just a promise by the employer.

Smidge001 · 19/10/2022 16:00

I put in as much as i can to mean the total going into my pot is the max £40k per year. I wish i'd started doing it sooner.

Polkadotties · 19/10/2022 17:40

One of the only funded public sector schemes which is funded is the LGPS. Others such as the Police pension are unfunded.

Polkadotties · 19/10/2022 17:40

Polkadotties · 19/10/2022 17:40

One of the only funded public sector schemes which is funded is the LGPS. Others such as the Police pension are unfunded.

  • one of the only public sector.
CornishGem1975 · 19/10/2022 17:45

Private sector. I pay in 5% and my employer pays in 5% which I thought was good until reading this thread! I can't afford to pay in more as I need the cold hard cash.

Original poster
bonzaitree · 19/10/2022 18:25

Smidge001 · 19/10/2022 16:00

I put in as much as i can to mean the total going into my pot is the max £40k per year. I wish i'd started doing it sooner.

Goals!

OP posts:
Uni68 · 20/10/2022 20:00

mid 30s was in private sector with a pension of 7% contributions topped up by 6 (then 10% as I left). My pot was awful as I hadn’t paid into it really until recent years. Job came up with public sector close to home for less pay but potential to get back to previous earnings. Although cut in salary Is difficult in these times, in the long term I’ll end up with a potential annual pension of my current wages which will never be achievable on my previous dc scheme. Planning to use dc pension as a bridge for early retirement rather than transferring in.

Sestriere · 21/10/2022 03:35

Private sector, age 56.

Defined benefit 1985-2018, now defined contribution. Currently putting in 100% of my salary in until I leave. Employer is putting in 13%.

Dailywalk · 21/10/2022 04:42

Wow this thread is eye opening! I’ve only ever been employed in private sector until made redundant 12 years ago. I never had a pension.
I then became self employed and until a few years ago didn’t have a pension. I now pay into a SIPP. No employer so no employer contributions. I’m 43 and my pension is tiny. It is depressing.

nannynick · 21/10/2022 05:55

Nice to see that some employers are paying in good percentages... 13% employer contribution to a DC pension is remarkable. I get 3% and I expect many others are like me.

I have been putting in 15%, and now have upped it to 20%. I am aiming to do as much as I can this year, as I am working more now than I was over the past couple of years. Make hay whilst the sun shines!

Once a month I track net worth and this month is almost £10k down on last month. Best not to look! The good thing through is that if you have a long while until you will take money out, then funds are on Sale... good time to buy more - buy low, sell high.