Pension contributions are payments you or others make into a pension scheme to help you build up savings for retirement. In the UK, most people pay into a workplace pension where both the employee and employer contribute a percentage of earnings.
You can also make extra contributions into a personal pension or a self-invested personal pension (SIPP). The government tops up your contributions with tax relief, which means some of the money you’d normally pay in tax goes into your pension instead.
Understanding how pension contributions work, the limits you can pay in each year, and the tax relief you can claim helps you build up a bigger retirement pot and plan for the future.
Before you make pension contributions, it’s important to understand how much you can pay in each year and what type of pension you have. Most people contribute to a workplace pension through automatic enrolment with payments taken directly from their salary and topped up by their employer and the government (through tax relief).
If you’re self-employed or want to save more, you can also pay into a personal pension or SIPP. The government adds basic rate tax relief to your contributions automatically, and higher or additional rate taxpayers can claim extra relief through Self-Assessment.
Checking your annual allowance the maximum you can contribute while getting tax relief helps you plan your savings and avoid paying tax charges on anything over the limit
Tax relief available for personal contributions is the higher of £3,600 (gross) or 100% of relevant earnings.
Any contributions in excess of £60,000, whether personal or by the employer, may be subject to income tax on the individual.
The limit may be reduced to £10,000 once money purchase pensions are accessed.
Where the £60,000 limit is not fully used it may be possible to carry the unused amount forward for three years.
The annual allowance is tapered for those with adjusted income over £260,000. For every £2 of income over £260,000 an individual's annual allowance will be reduced by £1, down to a minimum of £10,000.
Employers will obtain tax relief on employer contributions if they are paid and made 'wholly and exclusively' for the purposes of the business. The tax relief for large contributions may be spread over several years.
Auto enrolment places duties on employers to automatically enrol 'workers' into a work based pension scheme. Employers are required to automatically enrol all 'eligible jobholders' into a qualifying pension scheme and pay pension contributions on their behalf.
Employer minimum contribution: 3%
Total minimum contribution: 8%
Where the employer does not make the total minimum contribution the employee is obliged to pay the balance.
| 2025/26 (£) | 2024/25 (£) | |
|---|---|---|
| Automatic enrolment earnings trigger | 10,000 | 10,000 |
| Qualifying earnings band - lower limit | 6,240 | 6,240 |
| Qualifying earnings band - upper limit | 50,270 | 50,270 |
The basic State Pension is a regular payment from the government that an individual may be entitled to when they reach 'State Pension age'.
The basic State Pension depends on the number of years an individual has paid National Insurance or got National Insurance credits, eg while unemployed or claiming certain benefits.
To receive the basic State Pension an individual must have paid or been credited with National Insurance contributions (NIC).
In 2016 the State Pension was reformed into a single-tier new State Pension. In order to benefit from the full amount the individual will need 35 years, rather than the previous 30 years of NIC or credits for the full amount, with pro-rating where 35 years is not achieved. You will usually need 10 qualifying years to get any State Pension. The amount an individual receives can be higher or lower depending on their National Insurance record. It will only be higher if you have over a certain amount of Additional State Pension.
Currently an individual may also be entitled to the Additional State Pension. How much an individual gets depends on the number of qualifying years of NIC, the amount of earnings and whether the individual has been contracted out of the scheme.
| Weekly Basic State Pension | 2025/26 (£) | 2024/25 (£) |
|---|---|---|
| Basic - single person | 176.45 | 169.50 |
| New State Pension | 230.25 | 221.20 |
Pension contributions in the UK typically come from three places: you (the member), your employer, and the government through tax relief. Together, these build up your retirement savings over time.
Employees:
If you’re employed, you usually pay a set percentage of your qualifying earnings into your workplace pension each pay period. This is automatically deducted from your salary, often before tax, so you benefit from immediate tax relief.
Employers:
Employers are legally required to pay into your workplace pension if you’re enrolled under automatic enrolment. They must contribute at least the minimum legal amount, but some employers pay more as part of your benefits package.
Government:
When you make pension contributions, the government tops them up through tax relief. For most workplace and personal pensions:
Self-Employed & Personal Pensions:
If you’re self-employed or want to save more, you can make your own contributions into a personal pension or Self-Invested Personal Pension (SIPP). You’ll still get basic rate tax relief added to what you pay in, and you can claim any extra relief if you’re entitled.
By understanding who pays into your pension and how tax relief works you can make sure you’re not missing out on extra savings for retirement.
How you make pension contributions depends on whether you’re employed, self-employed, or paying into a personal pension alongside a workplace scheme.
Workplace Pensions
If you’re employed, your pension contributions are usually deducted automatically from your salary before tax. Your employer will handle this through payroll, adding their contributions and claiming tax relief on your behalf. You can also choose to increase your contributions if you want to save more.
Personal Pensions & SIPPs
If you’re self-employed or want to top up your retirement savings, you can pay directly into a personal pension or Self-Invested Personal Pension (SIPP). You can contribute regularly or make one-off payments — your pension provider will usually claim basic rate tax relief for you automatically.
Claiming Extra Tax Relief
If you pay higher or additional rate tax, you’ll need to claim extra tax relief through your Self-Assessment tax return. This can help reduce your overall tax bill.
Check Contribution Limits
Always check your annual allowance the maximum amount you can pay into your pensions each tax year while still getting tax relief. Contributions above this limit may be taxed.
Keep Records
Keep clear records of all your pension payments, especially if you’re self-employed or making personal contributions, so you can claim any extra tax relief and stay within the rules.
What are pension contributions?
Pension contributions are payments you, your employer, and the government (through tax relief) make into a pension scheme to help you save for retirement.
Who pays pension contributions in the UK?
Most employees pay a percentage of their salary, employers pay a minimum contribution, and the government adds tax relief to boost your pension savings.
How much should I contribute to my pension?
There’s no set amount, but many experts recommend aiming for at least 12% of your earnings if you can. This can include both your payments and your employer’s.
What is the annual allowance for pension contributions?
The annual allowance is the maximum you can pay into all your pensions each tax year while getting tax relief. If you go over, you may pay a tax charge on the excess.
How do I get tax relief on pension contributions?
Most workplace and personal pension schemes add basic rate tax relief automatically. If you’re a higher or additional rate taxpayer, you may need to claim extra relief through Self Assessment.
Can self-employed people make pension contributions?
Yes self-employed people can pay into personal pensions or SIPPs and still get tax relief on their contributions.
Can I make extra pension contributions?
Yes you can increase your workplace contributions or pay more into a personal pension, up to the annual allowance.
What happens if I don’t pay enough into my pension?
You don’t have to pay anything more than the minimum, but paying too little could mean you don’t have enough saved for retirement. It’s worth reviewing your contributions regularly.
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