Where to work for the biggest pension payouts

It is easy to ignore the pensions section of a job advert – especially when they are tucked away with “other benefits” such as gym memberships or discounts at the staff canteen. But they form a highly valuable part of the way you are paid.

While a low salary can be a turn off, a generous pension contribution can easily add thousands of pounds extra to your income once you are retired. So what are Britain’s most generous pensions?

Analysis for Telegraph Money has found that “gold-plated” public sector schemes are still the amongst the best on offer, but there are handful of private sector businesses offering to contribute similar amounts towards your retirement.

All businesses are legally obliged to offer a retirement savings scheme to their staff, and enrol them unless they actively opt out.

This “auto-enrolment” system has been almost universally hailed as a rare political success story since its introduction in 2012, with more than 10 million workers now saving into their workplace pension.

The policy rules mean that companies cannot induce staff to opt out and they are generally discouraged from offering a higher wage instead of a pension contribution.

But the system is not perfect: figures show that even with this policy nudge, most workers are still not saving enough to pay for a comfortable retirement.

The current minimum contribution level stands at 8pc (3pc from the employer, 5pc from the employee) – but research suggests that young people need to contribute 14.7pc of their salary in order to achieve a moderate standard of living in retirement.

Public sector pensions are famously among the most generous on the market – with one scheme offering employer contributions north of 20pc of their staff’s salary.

But even these can vary greatly according to which part of the Government you work for, and there are some private companies that offer just as competitive schemes too, if not better.

Ian Cook, of wealth manager Quilter, said that in the age of auto-enrolment, pension contributions were an important factor to consider when looking at the overall benefits package of a potential employer.

He said: “Salaries are obviously the most important starting point when it comes to choosing an employer to work for, but it doesn’t tell the whole story. If your employer offers a double-digit percentage contribution to your pension each month, well above the statutory minimum, then this can make a huge difference in the long-run.

“I was in the Armed Forces’ scheme for 11 years, and as a young soldier I had no concept of what a pension was and how important or relevant it was.

“Had I known then what difference it made and how it would provide for me, it would have encouraged me to stay a lot longer and accept the total salary package I was under. I was blinded by seeing my civilian friends ‘earn more’, when in retrospect they only had a little extra in their hands now, for a lot less in the future.”

The modern Armed Forces Pension Scheme is unique in that the employee makes no contribution – the pension is free and funded completely by the Government.

But for those who do not see a future in the army, Telegraph Money shines a light on the organisations offering the highest pension contributions for their staff.

Civil Service

At the top of the list is the Civil Service, where the Government will contribute between 26pc and 30pc of its staff salary into a “defined benefit” pension scheme. These types of pensions are highly sought after, as they guarantee an income in retirement that often comes with an inflation link.

These schemes are rare outside of the public sector, as most private sector workers have “defined contribution” pension schemes. These invest your savings as you work, which means the value of your pot can fluctuate over time depending on the state of the stock and bond markets. Drops could mean that you have to delay your retirement, or take out a smaller income.

While the Civil Service and other government organisations offer generous pension contributions, workers also usually have to pay higher contribution rates themselves.

While the standard rate for employees is 3pc, in the Civil Service you will pay between 4pc and 8pc of your salary toward your pension.

This week it emerged that the number of retired civil servants with pensions paying more than £100,000 a year had tripled since 2015.

NHS

The NHS ranks second on the list, paying 20.68pc into defined benefit pensions. Staff can contribute 5pc to 14.5pc of their salary, again depending on how much they are paid.

TotalEnergies Gas & Power

Perhaps surprisingly, it is a private sector business that ranks third on the list. TotalEnergies Gas & Power is an energy supplier for industrial, commercial and business customers within the UK.

Jobs advertised by this company on the website Adzuna offer pension contributions of up to 20pc – even better than the teachers’ pension scheme, which ranks fourth.

Teachers

Teachers famously have generous pensions – and jobs advertised on Adzuna show that on average, open teaching posts offer employer contributions of 16.5pc. However, this will also vary according to the pension scheme provider.

Most teachers employed by the Government in England are part of the Teachers’ Pension Scheme, which means they get the equivalent of almost 24pc of their pay added to their pensions. The teachers themselves can put in up to 11.7pc of their own pay into this defined benefit scheme.

Nationwide Building Society

Nationwide offers a contribution rate of 13pc to new staff enrolled into its defined contribution pension scheme, and the employee pays 4pc.

However, the building society says that it encourages them to save more into their pension by matching additional contributions up to 3pc. If their contribution goes up to 7pc, Nationwide increases its rate to 16pc.

Lloyds Banking Group and Autoglass

Lloyds also increases its pension contributions along with its staff. It starts at a generous 9pc when employees pay in 3pc of their salary, but rises up to 15pc if they contribute 6pc or more.

Autoglass, the car windscreen repair service, also offers a 15pc contribution if its employees pay in 5pc of their salary.

Fire service

The Firefighters’ Pensions England scheme offers a rate of 28.8pc into a defined benefit scheme. Staff enrolled in this scheme can save up to 14.5pc of their salary into their pension, depending on how much they earn.

Royal Mail

Royal Mail contributes 15.6pc of its staff’s pensionable pay into its “defined benefit cash balance scheme”.

This is a type of defined benefit pension, where staff are promised a defined lump sum at retirement. They can take 25pc of this tax free, and are then required to buy an annuity with the remainder.

In this scheme, 13.6pc of the staff contribution goes towards their guaranteed lump sum and the remaining 2pc goes to other benefits including death in service and ill-health benefits.

The employee makes contributions of 6pc of DBCBS pensionable pay, which also go towards the lump sum.

Unilever

Unilever has a unique savings system for its staff, known as its “benefits envelope”, which is on top of their regular pay. This is worth 25pc of pensionable earnings, and they can choose to put this towards their pension, get extra taxable pay or save some and use the rest as extra taxable pay.

If no choice is actively made, 15pc goes into its retirement savings plan and 10pc goes towards pay.

Unilever pays the running costs of the plan, and the balance of the amounts needed to provide the plan benefits not covered by its staff’s contributions. This means the company’s contributions vary each time the plan undergoes a valuation.

The company arranges a contribution of 12.5pc on any pensionable earnings above its “higher level”, which is based on internal salary bands and currently set at £50,400.