Pension employer contribution %

[happygertie]

Hi all,

I am rubbish with all things financial especially pensions. I am currently looking at a job which pays £40,000 per annum and the employers pension contribution is 26% - so my question is .. is that a decent pension?

26% is amazing. Public sector?

Best I've ever had is 12.5%. Currently revive 7.5%. Charity sector.

26% is very high. Are you sure that's right? If it is its great.

I pay 6% and my employer pays 19% so total contributions are 25% which is supposed to be a good pension, but because I am older and have only been in this scheme for 10 years I also put more in with AVCs. (I have some other pensions too).

My employer pays 10% which is the best I’ve ever had, but always been private sector so salaries are often higher than public sector. Assume this is public sector so not sure how that compares, but sounds very good!!

Haha mine pays 4% 😭

That has to be public sector. I've never seen a private sector contribution that high.

The highest I've had was in financial services, where they doubled your % contribution up to 7%, so if you pay 7 they kick in 14 for a total of 21%. My current employer matches up to 9%, which I think is pretty good.

Statutory minimum is 3% employer & 5% employee.

Yes that is likely one of the best pensions you will ever be able to access now. Is it DC or DB?

That has to be public sector. I've never seen a private sector contribution that high

This.

I have what's considered an 'excellent' private sector pension and that has an employer contribution of 17% when there's an employee contribution of 7% - so still only 24% including my 7.

If you've got that right, is this a weird stealth boast?

This has to be a stealth boast??!

I currently receive 8% employer contributions with optional employee contribution and consider myself lucky as I was self employed for many years with zero 'employer contributions' and then in a role receiving the minimum of 3% employer condition upon 5% employee contribution.

I would probably chop off an arm or leg to receive that remuneration package OP.

That must be including your contribution surely? That's very high.

Defo not a stealth boast. I have major ignorance / no clue with money / pensions, I thought it sounded amazing compared to my current one, but wasn't even sure I was comparing properly! .... and actually when I checked again this morning to make sure I hadn't read it wrong it's actually 27.1% for the pay bracket of the job. Employer contribution is 5.7%, and yes it is public sector.

So I'm guessing it sounds like a good pension. I'm embarrassed to say that I am mid 40's and this terrible with money. Can anyone recommend a good source be it blog/ podcast to get my head around pensions.

Meant employee contribution is 5.7%

It is good. Public sector? I work for the LA and it’s much the same. I pay 9% and they put in nearly 3 times as much. My last employer was 3%!

Its defined benefit scheme and I'm on almost identical one. However, I pay 7% and the employer contribution is 26%. But it doesn't mean you accumulate a pension pot from the contributions, it just what has to be paid for you to be in the scheme.
Every year I get a statement where it says what pension per annum I get given the contributions received in the previous years.
I work in academia, public sector.

Is this the Civil Service?The employer contribution is fairly notional really. The important thing to understand is that you get a guaranteed future pension income that is a percentage of your salary.

27% of 40k is about 11k a year. The max you can contribute is 60k/yr.

If you contribute 11k for 20yrs without factoring in pay rises but assume 3% growth (low so expected) that's a pot around 200k.

They will get you 13-14k/yr on top of state pension.

The more you add, the better it gets. Hopefully you'll have your mortgage paid off when you take it.

You should really check out Moneysavingexpert.com
There are lots of great guides on there which will explain pensions in detail and provide further resources.
There's also lots of good stuff about savings etc - if you're not very confident with money I'm guessing you won't have a plan for saving money etc so perhaps take a look at what's recommended on there so you can become more secure in your knowledge of your financial position.

Good luck OP - it's great that you have this opportunity and 40 isn't too late to turn things around for your long term financial security.

This will probably be DB so the contribution itself isn't hugely relevant, the benefit is defined and guaranteed rather than the contribution.

Great for you either way, my employer does 12% which is pretty good in the private sector.

@happygertie if it is CS pension it is a DB (Defined Benefit) scheme which is different to the DC (Defined Contribution) scheme some posters have described.

Civil Service Pensions https://www.civilservicepensionscheme.org.uk/ Is a good source of information. Other public sectors have their own pension websites.

Thanks everyone I appreciate all the advice.

And sorry I should have clarified, yes it is civil service pension.

DWP pay 27.5%, so it has to be government pension contribution and it is brilliant. My employer only pays 10% if you match it, otherwise the minimum they can get away with and it is really little more than a savings plan.

Agree with the recommendation for Martin Lewis's Money Saving Expert website. Excellent for all things money and great at explaining. You'll soon be very well informed OP.