Employer Pension Contributions

[RememberDecember]

What is a typical decent employer pension contribution these days? I currently get 10% (maxed out as I put in 5% plus AVCs although these aren’t relevant to er contribution).

I’m looking at other companies, considering moving but often they seem to be more like 6-8%. I just asked ChatGPT for UK avg and it said 3-6% which seems v low? Looking at professional roles.

My employer advertises 8% contribution, but only after joining was it clarified that they meant 8% of ‘eligible earnings’ which seems to be salary above basic but below higher rate tax bands (so salary between 12,571 and 50,271). As someone on a much higher salary that feels pretty disingenuous- previously my pension rate was based on total salary. Speaking with a couple of others on higher salaries it seems like this is increasingly common, so definitely something to query when looking at offers.

I only noticed because I was double checking my own pension contributions and realised it was much much lower than I thought - I can see others not really noticing and thinking they are putting away more than they actually are. They seem to apply the rule to my own salary sacrifice contributions as well, so I will be capped on contributions and would seemingly never be able to make the full £60k allowed.

Mine pay 10% max, I pay 10% but considering adding more for the tax relief

Yes the auto enrolment lower and upper thresholds are what the statutory minimum is based on, but this is not well publicised or known at all. Your employer (and you actually) only pay the percentage on money earned between £6240 and £50270. So the maximum employer contribution of '3%' is actually £110 per month. Anyone on auto enrolment should know this amd make arrangements accordingly.

@Labraradabrador that sounds completely disingenuous, and not the way I have seen it applied in current or previous companies. My ee and er contribution is definitely calculatedly off full base salary, and bonus. I guess you could open a SIPP to put in additional contributions if they won’t accept AVCs? Seems V unusual though.

I understand this is the statutory minimum, but I work in a professional services sector where benefits are generally competitive and an employer advertising x% would commonly be assumed to be against entire salary - at least 5 years ago that was the case. It feels like a sneaky erosion in benefits to revert to the statutory minimum interpretation of ‘relevant income’ - especially as virtually all employees at the firm are on the higher rate, so would never actually be paying the full advertised percentage of income.

I’m saying that comparing employer contributions between DC and DB pensions is futile, because the schemes are completely different.

In DB pensions, employer contribution rates are arbitrary. Pension accrual in DB schemes has nothing to do with how much the employer or employee contributes. There is no relation between the contribution % and the amount of pension the employee accrues. They’re completely different to DC schemes.

Oh yes, absolutely - it is sneaky and underhand. But also common esp in small businesses. Hence it's really important that people know what the statutory auto enrolment rules actually are.

My employer puts in about 15%, I put in 6-8%. It’s years since I set it up but it’s about that amount.

I always put in the full amount of any bonus too. I’ve had a mat leave, another coming up, long term sick leave and was unemployed for 6 months and went travelling for 4 months in my twenties, plus two years of low paid jobs and another year where I cashed out my pension, so I have a lot of making up to do.

I work 4 days a week on a fairly average salary.