Money guide
How much should you actually pay into a pension?
Pensions get explained badly, usually by people trying to sell you one. Here's the honest version, including the bit that makes contributions far cheaper than they look.
Start with the free money
If your employer matches contributions and you're not contributing enough to get the full match, stop reading and fix that today. A 100% match is an instant doubling of your money — no investment will ever beat it. Turning down the full match is turning down part of your salary.
What a contribution really costs you
This is the part that changes minds. Because pension contributions come out before tax — and, with salary sacrifice, before National Insurance too — £100 into your pension doesn't cost £100 of spending power.
- Basic-rate taxpayer: roughly £72 of take-home for £100 in your pension.
- Higher-rate taxpayer: roughly £58.
- Caught in the £100k–£125,140 taper: as little as £40.
The half-your-age rule
The old rule of thumb: halve the age you start saving, and put that percentage of your salary in — including your employer's share. Start at 24 and that's 12%. Start at 40 and it's 20%. It's crude, but it captures the real point: starting early matters far more than contributing hard later, because the early money has the longest to compound.
Why the auto-enrolment minimum isn't enough
The 8% legal minimum sounds like a target. It isn't — it's a floor, and it's calculated on qualifying earnings rather than your whole salary, so the real percentage is lower than it looks. Most analyses suggest 12–15% is closer to what a comfortable retirement requires.
The honest caveats
Pension money is locked away until at least 55 (rising to 57 in 2028), so it's the wrong home for savings you might need. Build a small emergency fund first, and clear expensive debt — paying 25% on a credit card while contributing extra to a pension is going backwards.
Beyond that, the two things that decide your retirement are how much you put in and how early. Everything else is detail.
See what regular saving could grow into →Move the sliders and watch compounding do the work.Quick answers
How much should I pay into my pension?
A common rule of thumb is to take the age you started saving and halve it — that percentage of your salary, including your employer contribution. Starting at 30 suggests around 15%.
What is the minimum pension contribution?
Auto-enrolment minimums are 8% of qualifying earnings in total, of which at least 3% must come from your employer. That minimum is widely considered too low to fund a comfortable retirement on its own.
Does my employer have to match extra contributions?
No, but many will match up to a limit. Any unclaimed match is money your employer has offered you and you are choosing not to take.
Written in plain English by mytakehome.money. General information, not financial advice — check anything important at gov.uk or with a qualified adviser.