Pension Choice

[Gareth Barry Conlon]

Hi all, I've got a workplace pension question that somebody more clued up than me might be able to give advice on.

I pay 4% of my salary into a pension, actually 5% as I get 20% tax relief. My employer contribute 5% also.

Is it worth me increasing my contribution to around 10% or more?

Thanks

There is not enough info there.

The basic question is do you need a bigger pension pot (most people = yes). Can you afford to put more in?

If it's matched by work it's a no brainer. Always get the max out of your employer.

 

[CarlosTevez'sEnglishTutor]

Thanks for your responses, gents. My employer will only contribute 5% and no more.

May be better setting up a personal pension in addition.

 

[Kompany Car]

Hi all, I've got a workplace pension question that somebody more clued up than me might be able to give advice on.

I pay 4% of my salary into a pension, actually 5% as I get 20% tax relief. My employer contribute 5% also.

Is it worth me increasing my contribution to around 10% or more?

Thanks

In principle yes, you save the tax at your marginal rate plus have the employer match upto a certain amount. But as @denislawsbackheel says make sure the pension fund where you are investing your money is performing and what the annual costs are for the fund.

Our default fund at work is expensive and relatively poor performing (basically a money making exercise for Scottish Widows with little reward). There are however a host of other funds available as part of the company pension where you can invest and get a much better return or if you are close to retirement better security.

In general, whilst only you can assess your tolerance to financial risk, if you are a long way from retirement, you are almost certain to be much better having your money invested in equities. As with all things there are no guarantees and they do fluctuate a lot on a month by month basis, but you only need to look at the SP500, FTSE 100, Nasdaq etc to see over 10yrs how much it has grown in value. If you're much closer to retirement more of a mix of bonds and cash is a better option.

The main issues with pensions are that they are locked away until you reach 55 (soon to be 57) and they are subject to the whims of the incumbent government up to the point when you access it. So as the adage says dont put all your eggs in one basket.