Company contribution to my pension

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Soldato
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If I pay 3% of my salary into my pension fund, my company will pay an extra 9% into my fund. Why can't they just pay me the 9% into my salary and let me decide what I put into my pension fund?

At my age I'd rather have the extra salary then in a couple of years after hopefully getting promoted I'll be able to worry about my pension.
 
So it's down to tax reasons then? I should see the 9% contribution as a benefit that wouldn't be financially possible to emulate in my salary?
 
Ahh ok, I see why they do this now. I agree now that it is better to have 9% in a fund than an extra 3% in my salary (or however it might work out).
 
desires said:
If I pay 3% of my salary into my pension fund, my company will pay an extra 9% into my fund. Why can't they just pay me the 9% into my salary and let me decide what I put into my pension fund?

At my age I'd rather have the extra salary then in a couple of years after hopefully getting promoted I'll be able to worry about my pension.
Click to expand...

Very shorted sighted view.
 
desires said:
So it's down to tax reasons then? I should see the 9% contribution as a benefit that wouldn't be financially possible to emulate in my salary?
Click to expand...

Exactly, the 9% is tax free until you potentially draw on that pension. To get that 9% in salary they would have to pay all the tax so you could get the 9% net.
 
desires said:
If I pay 3% of my salary into my pension fund, my company will pay an extra 9% into my fund. Why can't they just pay me the 9% into my salary and let me decide what I put into my pension fund?
Click to expand...

They are being a responsible employer ensuring you save for your retirement.
They understand how it works and you don't clearly.

desires said:
At my age I'd rather have the extra salary then in a couple of years after hopefully getting promoted I'll be able to worry about my pension.
Click to expand...

Saving early for a pension is the best possible thing you can do, the longer you leave it the more it goes up that you need to pay in, and it goes up quickly due to compounding.

I cant find the old version I had and a quick google only shows up american examples but take this as a guide "What is interesting, and for many people disturbing, is that if you start saving at 25 you need to save 15% of your current salary. However if you only start at 35 the amount to save increases to 25% of your current salary … and if you only start at 45 you will need to save 47% to accumulate this same level of savings!"
 
Sheesh, you pay 3% and they top it up with 9%? It's usually 6% + 6%, and that's for a 'decent' scheme, so you've got it really good here.

When the pension scheme docks 3% from your pay, that is before tax. Say you earn £1000, which is £970 after your pension contrib. You then just pay the tax on the £970 instead of the £1000. As tax is usually 20%, you'll be £24 worse off instead of £30 worse off. If the company was to pay you that 9%, it goes the other way, against you.
 
It's a banking institution, they did tell me it was good! Although I know it's not as good as some, one job interview I went to for a clearing bank said they'll put in 11% so long as you also contribute at least 2% which is really good it seems!
 
I pay 3% (and AVC's for more) and they pay 20%. I am lucky!

I did give up a non-contributory final salary scheme at my old place though.
 
the new .gov scheme (workplace pensions) is going to end up 5% employee 3% employer in 2018, make use of a decent pension scheme!
 
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