I'm 21 and just got my first job. Is there an 'ideal' percentage of my salary I should look to put into the pension scheme? I have heard the figure of 3-5% mentioned
Starting a pension scheme at an early age certainly has its merits. Giving yourself longer to invest for your retirement means that the money you invest has longer to benefit from potential investment growth. This means that over the long-term you have to invest less than you would if you waited a few years before starting your pension plans.
For many people in their early twenties retirement planning is quite low on the list of financial priorities. Other items, such as debt clearing or saving for a deposit on a first property, tend to make their way higher up the list, but if you find investing some money in a pension affordable at this age, and it doesn't interfere with your other priorities, then it makes perfect sense.
There are no clear cut guidelines about the ideal amount to invest in a pension plan. It really comes down to a combination of two factors - how much you can afford to invest and how much income you require during retirement. The first factor is easy to measure. The second can be a little bit harder, particularly for a 21 year old, because retirement is such a long time away and so many assumptions would have to be made to make predictions about future income requirements.
3-5% of your salary is a good starting point, especially if your employer is offering to match your own contribution. What is more important than the amount being invested at this stage is a regular review (at least once a year) and also asking yourself some serious questions about how much risk you feel comfortable taking with your pension fund and looking at the way it is invested.
(Information is intended for guidance only and is offered without any legal responsibility. None of the information provided constitutes any form of recommendation and is not intended to be relied upon by you in making any investment decision. You should always obtain independent professional financial advice before making any investment decisions).