What is the employee contribution?
With a final salary scheme the employee’s contribution is generally fixed, though may be varied from time to time. (With some pension funds facing difficulties in recent times, some employee contributions have increased.) Some schemes are non-contributory – the employers bear the whole cost of the scheme. This may be generous – or may simply mean you are getting a smaller salary than people doing similar jobs without a non-contributory scheme. All in all it is hard to say what are ideal contributions. A rule of thumb is that five per cent is a reasonable employee contribution for a quality pension scheme. To justify a lot more than this a scheme would either need to be particularly generous or a situation exist where the workforce agree to increase contributions to preserve a scheme in difficulties (which may be well worth doing). There are other questions that you can ask about a salary related scheme. You should look at our section ‘what makes a good salary related scheme?’.
