Employer's Pension Hierarchy of Altruism

Employer's Pension Hierarchy of Altruism

Auto-Enrolment, (or Workplace pension schemes), represent a bit of a change for pensions as employers provide the scheme as a statutory duty and the employee can only do nothing and accept it or actively opt-out.

For the employee, the scheme they get given will depend on how much their employer cares about doing the right thing. I suggest they use my little table as a "cut out and keep" measure of how engaged their employer is in real staff welfare.

Nevertheless, all employees need to consider that the Auto-Enrolment minimum contributions, even at the level legislated for the end of 2017, (4% employee, and 3% employer +1% tax = 8%), are likely to be wholly inadequate for half pay at age 67, (a good target for a relaxed retirement). The Money Advice Service suggests that at 20, a contribution of 14.4% of annual salary every year until retirement would be necessary. (https://www.moneyadviceservice.org.uk/en/tools/pension-calculator/info)

There are a lot of assumptions in this calculation and any or all of them could change in the 47 years from 20 to 67! Financial planning for life is not a single point solution, but collaboration over many years.

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The information contained is for guidance only and does not constitute financial advice. It is based on our understanding of UK legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly no responsibility can be assumed by Martin-Redman Partners its officers or employees, for any loss in connection with the content hereof and any such action or inaction.