Your employer contributes too
One of the best things about workplace pensions is that your employer contributes too. That’s extra money, on top of your salary, going towards your pension savings.
You don’t pay tax on contributions
You don’t pay income tax on pension contributions. We operate a net pay scheme, which means your contributions come out of your pay before income tax is taken off. You don’t have to claim the tax relief yourself.
See how your money could grow just by being in your workplace pension scheme
This is an example, the actual amounts will vary depending on the level of contributions paid by both you and your employer and your rate of tax.
If you don’t earn enough to pay income tax, you don’t get tax relief – so less money goes towards your pension savings. But we’ve got a safety net for you. We’ll give you a tax top-up equal to the tax relief you’ve missed out on. You can claim this at the end of the tax year.
How to get the most from your workplace pension
Start as early as you can
It may seem obvious. But the earlier you start paying into pension savings, the longer they have to build up – and the more you’re likely to get out at the end.
The later you start, the more you’ll have to save to get a decent amount at retirement.
Save regularly
Saving regularly means you benefit from ‘compounding’. When you build up savings, you earn interest or investment returns on the savings.
As your pot grows bigger over time so does the interest or returns, so your savings build up faster. This is ‘compounding’.
Understand if you'll get the retirement you want
To get a pension of £20,000 a year:
- start when you’re 25 – you need to save around £250 a month
- start when you’re 35 – this goes up to more than £400 a month.
Source: the Money Advice Service.