Estimate how much your pension could be worth at retirement and what monthly income it could provide.
When you contribute to a pension, you receive tax relief — the government adds back the tax you paid on that money. Basic rate taxpayers get 20% added automatically, while higher rate taxpayers can claim an additional 20% through Self Assessment.
With auto-enrolment, most employees contribute at least 5% of qualifying earnings (including 1% from tax relief), and the employer adds at least 3%. Together that's 8% going into your pension each year.
The Pensions and Lifetime Savings Association suggests these annual income targets for retirement:
Minimum: £14,400/year (single) — covers basic needs
Moderate: £31,300/year (single) — comfortable lifestyle with holidays
Comfortable: £43,100/year (single) — regular luxuries and long-haul travel
These figures include the full State Pension (currently £11,502/year). So your private pension only needs to make up the difference.
When you reach pension age (currently 55, rising to 57 in 2028), you can take 25% of your pension pot tax-free as a lump sum. The remaining 75% is taxed as income when you withdraw it.
The full new State Pension is £11,502 per year (2024/25). You need 35 qualifying years of National Insurance to get the full amount. This is paid on top of any private or workplace pension. Check your State Pension forecast at gov.uk.
Contributing more to your pension is one of the most tax-efficient ways to save. You'll pay less income tax and less National Insurance (if done via salary sacrifice), plus your investments grow tax-free. Use our salary calculator to see how pension contributions affect your take home pay.