Pension Contributions
What are your pension contribution limits?
There’s no maximum pension contribution. But the government sets a limit on how much you can pay in before incurring tax charges. That’s called your 'annual allowance'.
- For the 2024/25 tax year, the standard annual allowance is £60,000 or 100% of your annual salary, whichever is lower. It’s a combined total across all of the pensions you're paying into. It could be less, depending on your individual allowance circumstances.
Once you start drawing on your pension, your annual allowance can be replaced by the money purchase annual allowance (MPAA).
- For the 2024/25 tax year, the MPAA is £10,000. It kicks in if you start taking taxable income from your pension, as a lump sum or through flexible retirement. To see if it could apply to you, visit the Government’s MPAA page.
If you have a workplace pension, there is a minimum pension contribution.
- In general, if you’re paying into one, you and your employer have to together pay at least 8% of your salary into it. They have to put in at least 3% of your salary, which means you have to pay in 5%.
If you’ve set up your own pension, there’s no minimum personal pension contribution. And there’s no maximum personal pension contribution either, although if you don't want to incur a tax charge you should keep an eye on how much of your annual allowance you’ve used up.
You'll also be contributing to your State Pension by paying a percentage of your income in National Insurance. The actual amount depends on a variety of different factors. You can visit the Government’s NI page for more details.
What makes up my pension contributions?
Savings help from the government
The government contributes to your pensions in the form of tax relief. The amount contributed depends on tax rules and your individual circumstances. Visit our page on pension tax relief for more information.
Extra money from your employer
If you’ve got a workplace pension, your employer will contribute at least 3% of your salary. The exact details of how that works will vary from employer to employer. Check with yours to find out more.
Personal contributions… from you!
And of course, you’ll probably be paying into your pension yourself. If it’s a workplace pension, you’ll usually have to pay in at least 5% of your salary. And there’s no upper personal pension contributions UK limit, but you will have to take your annual allowance into account.
How is a pension contribution calculated?
Let’s imagine that you're 30 years old and you earn £20,000 per year. You’re contributing 5% of that to your pension, with your employer topping it up with 3%. So:
- Your personal contribution is 5% of your gross pay of £20,000, which is £83.33 per month
- Your employer’s contribution is 3% of that £20,000, which is £50 per month
- You’d normally get tax relief of at least £16.67 per month
That means that, in this case, your total monthly pension contribution would be at least £133.33. The exact amount would depend on how your employer takes your contributions from your pay. To work it out, either check your payslip or ask your employer, or use a workplace pension calculator.
Can I 'top-up' my pension contributions?
Workplace pension contributions
You can usually start putting more into your workplace pension at any time – and if you do that, your employer might up their contributions too. You might also be able to pay ad hoc lump sums into it. Check with your employer to see how that could work.
And if you need more flexibility, you can also open a personal pension to boost your overall pension pot.
Personal pension contributions
It’s easy to top these up by just increasing your regular payments! Or you can top your pension up with one or more lump sum payments. Just keep an eye on how much of your annual allowance you’re using up.
State Pension contributions
If you have gaps in your National Insurance contributions, for example because you were:
- self-employed
- working abroad
- unemployed but not claiming benefits
then you can pay to make them up. To get the full State Pension, you need at least 35 years of contributions. If you’ve contributed for less than that, you’ll get a smaller monthly payment. And you won’t get any payments at all if you’ve contributed for less than 10 years.
If you have a gap because you were caring for someone, you might be able to claim Carer’s Credit to cover it.
You can check your NI history for gaps here.
Tax relief on personal pension contributions
You can normally get tax relief on personal pension contributions that are up to 100% of your annual salary. You’ll either get it automatically or have to apply for it yourself, depending on what sort of scheme you’re in and how much income tax you pay.
For a full breakdown of how that works across the UK and in Scotland (where tax rates are a bit different), take a look at our Pension tax relief and benefits article.
How much should my pension contributions be?
That depends on a range of different factors. They include:
- How much you’re earning just now
- How much your ideal retirement could cost
- How long you’ve got until you retire
Our How much should I pay into my pension? article will help you think through all that and more.
Do I have to contribute 5% to my pension?
The answer to that is – sometimes yes, sometimes no!
It’s yes if you have been auto-enrolled into a workplace pension and:
- Are aged between 22 and State Pension age
- Earn more than £10,000 a year
- Your employer’s contributing 3% of your salary
But if your employer starts contributing more, you’ll probably be able to contribute less.
If you’re earning less than £10,000 a year, you can opt in to your pension but you don’t have to pay anything into it. And however much you’re earning, you can opt out of your pension and not pay anything into it – though that should only ever be a last resort. Our Can I opt out of my pension article explains why.
What should I do next?
We’ve talked you through pension contributions but you might still have questions about other aspects of your pension:
What is a pension and how does it work?
What do I need to know about the State Pension?
What is a self-invested personal pension (SIPP)?
And if you’d like to see how much you could end up with in your pension pot when you retire, check out our Retirement Income Calculator.
Pension saving made simple
Sorting out your pension with us couldn't be simpler. With a quick and easy sign-up process, you can start putting money away for retirement from as little as £100.
- A low service charge of 0.25% and a Fund Management Charge of just 0.31%.
- Choose from five diverse multi-index funds, based on your risk appetite, or from our extended fund range.
- Open your account, check the value of your pensions, set up regular payments or top-up your savings with our secure online account.
You can withdraw money from your pension when you turn 55 (rising to 57 from 2028). Please remember the value of your pension pot will go up and down. It isn’t guaranteed, so you may get back less than you put in.
Pensions explained
What is a pension and how does it work?
New to pensions? We answer some key questions you might have before you start saving for retirement.
What do I need to know about the State Pension?
The State Pension is your basic income when you retire. Discover how it works and how much you could be eligible for.
What is a self-invested personal pension (SIPP)?
You might have heard of a self-invested personal pension (or SIPP), but what is it? We explain how it works and what choices it offers.
