How much do I have to contribute to my workplace pension?

Last updated: 09 Dec 2020

The only guaranteed income most young people in the private sector will have in retirement is the State Pension. The full weekly rate for the New State Pension is £179.60 (2021-22) and is only designed to keep pensioners above the poverty line.

Pensions professionals advise members of defined contribution schemes to save between 15% and 20% of their salaries into pensions to achieve a comfortable income in retirement.

The Money Advice Service’s pensions calculator is a good resource to estimate an appropriate amount you should save. (Please note there are other calculators that are available).

This sounds like a large amount, but pension tax relief and contributions from your employer mean it can be achieved.

Standard rate taxpayers will receive 20p of pensions tax relief paid into their pension for every 80p they contribute. Employers will also make contributions to your pension if you are enrolled in a workplace pension scheme.

Typically employers’ contributions increase the more you pay, up to a maximum limit. We recommend that members review the structure of employee and employer contributions to see if increasing their contribution could increase the amount their employer pays.

Prospect negotiators work hard to ensure that members enjoy an above average employer contribution.

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