I have constructed an excel file that can be used in planning for your personal company-run DC pension fund contributions, as well as other factors related to retirement planning (you can download the file above).
A DC (Defined Contribution) pension is the type of pension scheme that you are most likely to be a member of. It is essentially a pot of money that you (and often, your employer) will make contributions to in order to fund your retirement. These contributions are typically paid as a % of your monthly salary.
The government likes to encourage you to invest in your pension in order to relieve burden from the state pension. To do this, one of the measures in place is that pension contributions are tax exempt, up to certain limits (see below).
| Age | Percentage Limit |
| Under 30 | 15% |
| 30 – 39 | 20% |
| 40 – 49 | 25% |
| 50 – 54 | 30% |
| 55 – 59 | 35% |
| 60 or over | 40% |
This file allows you to specify the pension contributions made by you (the employee) and your employer at these age intervals. In many cases your employer will make a base rate contribution at each of these age intervals, and then match your contributions up to a certain limit. This will vary by employer.
The current (as of 2021) qualifying age for state pensions is 67 and will increase to 68 in 2028. My file has set this age at 68, but depending on your age, this can be easily adjusted.
It is very common in retirement funds to slowly transition your investments away from equities, which can be more volatile, towards bonds, which provide a safer, but lower return. In this file there is a table where you can specify the ages at which you would like to transition in increments of 25% of fund value. You can also specify the average return expected from your equity and bond investments depending on your risk appetite.
The aim in allowing for these specific return %s is that they are assumed to be the return above inflation, this way we can think about all of these figures in terms of today’s money value.
The main outputs to keep an eye on when adjusting your inputs in this file are (1) the graph at the top, which provides a helpful indicator for how the variables change your pension fund value over time, and (2) the age at which your pension fund is expected to run dry.
The above means that this file assumes your pension fund will act as an ARF (Approved Retirement Fund). This is a personal retirement fund where you can keep your money invested up to and after retirement. You could, however, ignore this age as you may take your pension fund and purchase an annuity at retirement. An annuity is a contract with a life insurance company that will pay you a regular income for the rest of your life in return for paying a large fixed sum of money at the beginning of the contract.
The hardest part of starting your pension is not knowing what contributions or other factors may be enough, too little, or too much. This file aims to help you to get a grasp of how each of these decisions that you have to make will affect your overall retirement fund. Hopefully this will help you to make these decisions with some confidence in how this will affect your future.
[Disclaimer: Don’t make financial decisions based solely on what you read here. Consult a financial advisor before making any big decisions in relation to your financial future.]