How much should I be putting into my pension?

7 minutes

How much you need to pay into a pension can depend on several factors. Read our guide on the key things to consider.

Boost your pension savings by making additional contributions

Joining a pension scheme is an important first step on the road to a comfortable retirement. But estimates of your future retirement income might make for uneasy reading if you only pay in the minimum contribution each month. 

Whilst the state pension can offer some financial support, you should also consider paying into your own pension scheme. Our recent research* shows only 22% of non-retired adults know how much the state pension is, with 17% of those thinking that’s it’s higher than it actually is.

Working out exactly how much to put into a pension is different for each of us. It can depend on the age you start saving, the type of scheme you’re a member of, and how long you expect to be retired.

Read on to explore the key factors that can influence your calculations – and some potential quick wins.

How do I make pension contributions?

Pensions generally fall into two main categories – workplace and personal schemes.

Workplace pension schemes

These are arranged by employers and allow you to make contributions automatically. You agree for a percentage of your salary to be placed in your pension pot when you get paid. The main benefits of workplace pensions are the tax relief they offer, and the fact your employer is required to make contributions too. 

Personal pensions

You set up a personal pension yourself, with the option to make regular contributions or occasional lump-sum payments. They’re particularly popular with self-employed people who can’t access a workplace scheme. 

Your savings are invested in assets like shares, in a bid to increase your returns. Specialist schemes such as self-invested personal pensions offer you more control over these investments.

Setting your contributions

You’ll need to make minimum contributions as a member of a workplace scheme. Under the current rules, employers are required to automatically enrol you into their pension plan, so long as you meet certain criteria.

Once enrolled, you’ll have to make a minimum monthly contribution worth 4% of your qualifying earnings, with 3% then added by your employer. Another 1% comes from tax relief, leading to an 8% contribution overall. These minimum contribution rates apply to anyone earning between £6,240 and £50,270**.

Whether you have a workplace or personal pension, the important thing to remember is that minimum contributions are only a starting point. Think of them as a useful foundation which can be built upon to meet your specific retirement goals. It’s just a case of working out your optimum contribution rate and getting in touch with your pension provider to change the amount you’re putting away.

How much should I pay into my pension?

Many experts believe your ideal pension contribution is determined by your age. They suggest halving the age you are when you join a pension scheme – and contributing that percentage of your pre-tax wage.

Others have encouraged workers to build a retirement pot worth 10 times their average career salary. There’s also a theory that putting away 12.5% of your monthly pay is a useful benchmark.

However, deciding how much to put into a pension also comes down to:

  • Your desired retirement lifestyle. A schedule packed with holidays and socialising will mean you need a much bigger pension pot than a more basic routine.
  • How long you expect to be retired. Setting a target retirement age should help to focus your pension calculations.
  • Expenses you’re likely to face in later life. Medical fees and care costs are among the additional expenses worth budgeting for.
  • Your other sources of income. Think about how the state pension, property and other investments you own could bolster your retirement income.
  • More pressing financial concerns. You may want to prioritise paying off debts with high interest rates before raising your pension contributions. Other goals, such as buying a home, might also take precedence at different life stages.

How much can I pay into my pension?

Along with lifestyle and financial factors, it’s worth researching the tax allowances that apply to pension contributions. They may affect how much you can pay into a pension each year and include:

  • The annual allowance. Currently set at £60,000, this is the total amount you can contribute to a pension each financial year before tax becomes payable. You may find your allowance is lower than £60,000 if you receive a large income or have flexibly accessed a pension.

How can I increase my contributions?

Follow these tips to boost the amount you’re putting into your pension:

  • Don’t put off joining a scheme. The earlier you start saving, the better, as your investments will have longer to grow.
  • Trim your spending. Reduce the amount you spend on subscriptions, fancy coffees and eating out – and save the spare cash through your pension instead.
  • Make the most of pay rises. Consider increasing your contributions each time you receive a salary hike.
  • Read your annual statements. Keep a close eye on any income projections sent by your pension provider to ensure you’re on track.
  • Try a pension calculator. Money Helper can give you an idea of how much you’re likely to receive in retirement – and the amount you need to save.

Take a look at the bigger picture with help from our retirement advice service. Our friendly advisers can help you get the most out of your pension savings. Request a call back today to get your pensions ready for the retirement you want to enjoy.


What pension contributions are covered by the annual allowance?

The £60,000 annual allowance can have a bearing on how much you put into a pension. It covers all your private pensions in a given financial year, including any contributions made to defined contribution schemes, plus any defined benefit scheme increases.

Can I pay into a pension if I don’t work?

Yes, you should still be able to make contributions to a personal pension scheme even if you’re not currently employed. These schemes may be an option if you’ve temporarily left work to look after children or care for relatives.

What is an annual pension statement?

Your pension provider or employer should send you an annual statement to show the progress of your retirement savings. It normally includes information about the value of your pot and how effectively your investments are performing. You may also get estimates of your future retirement income.

Data Sources:

*LV= Wealth and Wellbeing Research Programme - LV= surveyed 4,000 nationally representative UK adults via an online omnibus conducted by Opinium in September 2022

**The Pensions Regulator