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How much should I pay into my pension?

With UK life expectancy standing at 78 for men and 82 for women in 2011, British people are living longer than ever before.

In the UK, British pensioners receive a state pension, but this is a relatively small amount of money and you may want to make additional plans to make your retirement more comfortable. You can do this by taking out either a personal or company pension plan.

Company pensions

Many companies offer pension plans to their employees. Typically these are either “salary related”, when your pension payments are based on the final salary you earned in the company, or “money purchase”, in which your pension payments are drawn from a sum of money you invest over time. In addition to your own contributions, your employer will generally make payments into the pension fund too, but you should check how much this is likely to be.

Personal pensions

Many banks and building societies offer personal pensions. These could be a good option if you’re self-employed, work for a company that doesn’t offer a company pension or want to save something extra in addition to the contributions you make to a company pension. Like company pensions, personal pensions are eligible for tax relief, which means that the government tops up your contributions with money it would otherwise have taken from you in tax.


How much you need to pay into a pension fund varies according to several factors, including your age and the amount of money you would like to receive in your pension each week on retirement.

Your age is a very important factor because younger people have more time to build up their pension fund than someone nearing retirement. The consumer group Which emphasises the simple statement that “the earlier you start saving for retirement, the less you have to put away”.


As a guideline, Which recommends that a 30-year-old man who wants to retire at 68 with an income of £5,000 each year should be saving £74 per month into a pension fund. For a 40-year-old, the equivalent figure is £145 per month, while it’s £330 per month for a 50-year-old. Double the retirement income and the monthly figures rise too: £149 per month for a 30-year-old man, £290 per month for a 40-year-old and £661 for a 50-year-old.