Workplace Pensions: the full guide

Your employer will put money into your pension, but often only if you put some in too. Not taking the full match is turning down a pay rise.

Auto-enrolment: at least 8% of your qualifying earnings goes in, with your employer paying at least 3%.
Many employers match more if you pay more. Find your scheme's maximum match and hit it.
Tax relief means £80 from your pay becomes £100 in your pension (more for higher-rate payers).

Figures for the 2026/27 tax year · last checked 2026-10-07

The state pension won't cover it

The full new State Pension is about £12,500 a year in 2026/27, and you can't touch it until State Pension age (66 now, rising to 67 by 2028 and scheduled to go higher). Most people want more than that, and want it earlier.

That gap is what your workplace pension is for.

Auto-enrolment: the free money machine

If you're aged 22+ and earn over £10,000 a year, your employer has to put you in a workplace pension. By law, at least 8% of your qualifying earnings goes in:

Your employer: at least 3%
You: the rest (5%, which includes tax relief from the government)

Qualifying earnings are what you earn between £6,240 and £50,270, so the first chunk of your salary doesn't count.

Employer matching: the bit people miss

Plenty of employers will go beyond the legal minimum if you do. A common setup: "we'll match whatever you pay, up to 6% of your full salary."

If you're only paying the minimum, you might be leaving thousands on the table every year. Check your staff handbook or pension portal for the words "matching" or "contribution structure".

The question to ask HR

"What's the maximum employer contribution, and what do I need to pay to get it?"

Why bother? Here's a £35,000 salary over a 40-year career, comparing the legal minimum with a 6% + 6% match:

Minimum contributions vs full employer match

Legal minimum (8% of qualifying earnings): £293,000
6% + 6% match (£350 a month): £534,000

Illustration only. Total going into the pension each month, including employer and tax relief. Assumes a flat £35,000 salary and 5% a year growth, before inflation and charges.

Tax relief: the government chips in

Pension contributions come out of your pay before income tax. Paying in £100 costs a basic-rate taxpayer £80. For a higher-rate taxpayer it costs £60, though depending on the scheme, you may need to claim the extra relief through a tax return.

Where £4,200 a year in your pension comes from

What you actually lose from take-home pay£1,680
Tax relief from the government£420
Your employer's match£2,100

Goes into your pension£4,200

£35,000 salary, 6% from you and 6% from your employer, basic-rate taxpayer. Every £1 that leaves your take-home becomes £2.50 in the pot.

Salary sacrifice schemes go one step further: you also skip National Insurance on the amount you pay in, so it costs even less.

It also lowers the pay your student loan repayments are worked out on. If you have a plan 1, 2, 4 or 5 loan (9% of earnings over the threshold) or a postgraduate loan (6%), you repay less each month too. This only works with salary sacrifice: normal pension contributions leave your student loan repayments unchanged.

The catch: you generally can't access this money until age 55 (rising to 57 from April 2028). Pensions are for future you, not for a house deposit. That's what the ISA is for.

Changed jobs? Old pensions don't vanish. Use the government's free Pension Tracing Service to find them, and consider combining them so you can see everything in one place.

Auto-enrolment: the free money machine

If you're aged 22+ and earn over £10,000 a year, your employer has to put you in a workplace pension. By law, at least 8% of your qualifying earnings goes in:

Your employer: at least 3%

You: the rest (5%, which includes tax relief from the government)

Qualifying earnings are what you earn between £6,240 and £50,270, so the first chunk of your salary doesn't count.

Employer matching: the bit people miss

Plenty of employers will go beyond the legal minimum if you do. A common setup: "we'll match whatever you pay, up to 6% of your full salary."

If you're only paying the minimum, you might be leaving thousands on the table every year. Check your staff handbook or pension portal for the words "matching" or "contribution structure".

The question to ask HR

"What's the maximum employer contribution, and what do I need to pay to get it?"

Why bother? Here's a £35,000 salary over a 40-year career, comparing the legal minimum with a 6% + 6% match:

Minimum contributions vs full employer match

Legal minimum (8% of qualifying earnings): £293,000
6% + 6% match (£350 a month): £534,000

Illustration only. Total going into the pension each month, including employer and tax relief. Assumes a flat £35,000 salary and 5% a year growth, before inflation and charges.

Tax relief: the government chips in

Where £4,200 a year in your pension comes from

What you actually lose from take-home pay£1,680
Tax relief from the government£420
Your employer's match£2,100

Goes into your pension£4,200

£35,000 salary, 6% from you and 6% from your employer, basic-rate taxpayer. Every £1 that leaves your take-home becomes £2.50 in the pot.

Salary sacrifice schemes go one step further: you also skip National Insurance on the amount you pay in, so it costs even less.

The catch: you generally can't access this money until age 55 (rising to 57 from April 2028). Pensions are for future you, not for a house deposit. That's what the ISA is for.

Changed jobs? Old pensions don't vanish. Use the government's free Pension Tracing Service to find them, and consider combining them so you can see everything in one place.