The cost of a pension depends on the type of pension.
The total costs for a pension will likely include a number of charges for various parties, including trustee fees, administrator fees, investment manager fees, fund charges and potentially other charges for activity or transactional items.
Your Island Pension has no setup costs, no employer costs and a simple annual management charge that incorporates the trustee, administrator and investment manager fees. Fund charges will apply in addition, however there are no activity or transactional charges.
There is no real standard contribution level, however it is widely accepted that in order to save a meaningful amount contributions of 10% of an individual’s salary would be needed.
Under the Secondary Pensions rules there are set minimum contribution levels for employers and employees.
Initially this is 2% total (1% for both the employer and the employee), however this amount increases over a period of 8 years to 10% total (3.5% from the employer and 6.5% from the employee).
It is possible for employers to pay a higher contribution rate and this may allow the employee to pay less, or nothing.
The minimum contribution rates under Secondary Pensions increase on a phased basis over several years. This is to reduce the financial impact on employers and employees, but to ensure that a meaningful level of contributions is being reached.
How much does the employer contribute to the pension
Employers are legally obliged to contribute at least the minimum contribution rate set out in the Secondary Pensions law. Employers can choose to pay a higher amount, however there is no legal obligation for them to do so.
Minimum employer pension contribution
The minimum contribution rate that employers will be required to pay under the Secondary Pension law at outset is 1%.
Minimum employee pension contribution
The minimum contribution rate that employees will be required to pay under the Secondary Pension law at outset is 1%.
This amount increases on a phased basis over the subsequent years to reach 6.5% in 2032.