How much do you put in your pension?

[d000hg]

I'd do a poll but I'm tired and not sure what options to put... so just post unless a friendly moderator feels like adding one

I've a pension set up so the company would pay into it rather than me personally, but I only paid into it the first year (3-4 years ago, about £4k). I'm not a great fan of pensions and with the £15k ISA limit, after filling up mine and the wife's there's not a whole lot left.

a)What would be a reasonable amount to put in each so that the pension actually amounts to something (I'm 34), roughly equatable to what a permie on £40k might be likely to contribute?

b)What do you put in roughly each year, and what priority is a pension amongst your other investments?

[mudskipper]

I'd do a poll but I'm tired and not sure what options to put... so just post unless a friendly moderator feels like adding one

I've a pension set up so the company would pay into it rather than me personally, but I only paid into it the first year (3-4 years ago, about £4k). I'm not a great fan of pensions and with the £15k ISA limit, after filling up mine and the wife's there's not a whole lot left.

a)What would be a reasonable amount to put in each so that the pension actually amounts to something (I'm 34), roughly equatable to what a permie on £40k might be likely to contribute?

b)What do you put in roughly each year, and what priority is a pension amongst your other investments?

In my last permie job, I contributed 7.5% of my salary, and my employer matched it. When I started contracting, I was putting in a similar amount (in pounds and pence), but realised that's nowhere near enough. I've currently got a 1K a month DD, and I do lump sum top ups as and when - so last year I probably put in 30Kish in total. I reckon you need a pension pot of at least 500K if that's going to be your main source of income when you retire, and preferably quite a bit more. Mine's a shade under 200K at the moment (I'm older than you). I've also got a permie pension from back in the day, but I think that will only give me 3 or 4K a year.

[cosmos]

I put in £1k a month also, but TBH have no idea if thats sufficient....

[I just need to test it]

My LtdCo pays £2K a month into a pension. I'm 52 and put nothing away during my 30s and 40s [/headinhands]

[VectraMan]

I paid in 10% in my last permie job, and the employer contributed a measly 3%. Though it was only in the last couple of years I started this at all (I'm 44). Now that I have control again MyCo is paying in 80% for the last few months of this year, but that's mainly to avoid paying upper rate tax.

It seems to me (assuming the government doesn't change this) anything into the upper rate and you're better off putting it into a pension, but anything below that and you may as well pay the tax now and put the money into an ISA. I currently have about 3 times more in ISAs.

I've accepted that I'm probably screwed financially no matter what I do. Hopefully I'll die young.

[BrilloPad]

Nothing. I spend my money on divorces.

[ASB]

In general terms a pension gives up control and provides tax deferment. There are two substantial potentail tax breaks (both quite likely under fire).

1. The fact that you may be a higher rate tax payer in work but not in retirement
2. The 25% tax free lump sum.

In my view if you can make company contributions to avoid being a high rate tax payer that is worthwhile. Currently.

If you can fill up isa etc a certain extent from your basic rate band that is also worthwhile. However think about the effect that may have of tax credits, family allowance etc (if that is relevant and bothers you).

Another frustrating issue can be that if you find yourself with no/little income then all benefits are generally means tested so you ain't going to get much.

In order to get a reasonable retirement (2/3 salary) I will need 600k. Not going to get there.

As much as you can comfortably afford really is the answer.

Live now and blow the lot on coke and hookers is a fine strategy, but not likely to make for an easy dotage.

Do nothing but scrimp and live frugally and then be the richest person in the graveyard. The right answer is somewhere in the middle.

I pay approx 25% of my salary by salary sacrifice, and my employ 10%. But only for the last 10 ish years. 10 more to go. I I don't make it then the dependants will be ok. But perhaps I should have lived a bit more.

[Bee]

Nothing. I spend my money on divorces.

[Chuck]

I've got a couple of old permie pensions lying around somewhere. They are probably worth about 4p.

I don't like the idea that no matter how good your planning is for pensions, the government can raid them at will.

My retirement plan is to sell up my two good sized homes, move in to a smaller house somewhere, and bank whatever cash is left over.

Probably about as tax inefficient as it can be, but nothing appreciates in value like houses (at the moment).

[Fred Bloggs]

IMO, pension contributions are simply too good to pass by on. Put as much as you can into your SIPP and when you reach the £1 million limit, as many younger workers will, then stop contributing. With MyCo contributions you're avoiding ER's NICs @ 13.8%, EE's NICs @ 2% and income tax @ 40%. That is a very good deal in my book.