How Much Should You Put Into Your Pension?

I have a question for you. Without logging in, do you know what percentage of your salary goes into your pension each month? Most people do not. They signed up during onboarding, ticked the default box, and have not thought about it since.

When I was 24 and earning £20,000, I was contributing the minimum 5% to my workplace pension. My employer put in 3%. I thought 8% was fine because that is what the government set as the standard. It took me six years to realise that “fine” and “enough” are very different things.

The minimum is not enough

Since 2019, auto enrolment requires a minimum total contribution of 8% of qualifying earnings: 5% from you, 3% from your employer. That sounds reasonable until you see what it actually produces.

On a salary of £30,000, qualifying earnings (the band between £6,240 and £50,270) come to £23,760. At 8%, that is £1,901 per year going into your pension. Assuming 5% real growth over 35 years, that produces a pot of roughly £170,000.

The Pensions and Lifetime Savings Association says you need about £370,000 for a moderate retirement. That is not champagne and yachts. That is running a car, taking one decent holiday a year, and eating out occasionally. At the minimum contribution rate, you will fall short by £200,000.

The auto enrolment minimum was designed to get people started. It was never designed to get people to the finish line.

The rule of thumb

There is an old rule that financial advisers have used for decades: halve your age when you start saving, and contribute that percentage of your salary.

Start at 20? Contribute 10%.
Start at 30? Contribute 15%.
Start at 40? Contribute 20%.

That includes your employer’s contribution. So if your employer puts in 5%, and you started at 30, you need to contribute 10% yourself to hit the 15% total.

It is not perfect. It does not account for salary growth, investment returns, or the specific retirement you want. But as a starting point, it is far better than the 8% default that most people settle for.

The actual maths

Here is what different contribution rates produce over time, assuming a £35,000 salary, 5% real investment growth, and contributions on the full salary (not just qualifying earnings). These are rough figures, but they tell a clear story.

Total contribution	Pot at 55 (30 years)	Pot at 60 (35 years)	Pot at 65 (40 years)
8%	£195,000	£260,000	£340,000
12%	£293,000	£390,000	£510,000
15%	£366,000	£488,000	£638,000
20%	£488,000	£650,000	£850,000
25%	£610,000	£813,000	£1,063,000

At 8%, you barely scrape into moderate retirement territory by 65. At 15%, you are comfortable. At 20% or above, you have genuine options: early retirement, part-time work in your 50s, or a very comfortable standard retirement.

The difference between 8% and 15% over 40 years is nearly £300,000. That is the cost of sticking with the default.

Employer matching: do not leave it on the table

Some employers will match your contributions up to a certain percentage. If your employer matches up to 5% and you are only contributing 5%, you are getting 10% total. Brilliant. But if you are contributing 3% because you want the extra £50 a month in your pay packet, you are walking past free money.

I cannot stress this enough. Employer matching is a 100% guaranteed return on your contribution. No investment in the world offers that. Before you consider anything else, whether that is an ISA, paying off low-interest debt, or saving for a house deposit, make sure you are getting the full employer match.

Find out what your employer offers. HR will know. If you are not maxing the match, increase your contribution today.

Salary sacrifice: the upgrade most people miss

If your employer offers salary sacrifice for pension contributions, you should almost certainly use it. With salary sacrifice, your pension contribution comes out of your gross salary before tax and National Insurance are calculated.

For a basic rate taxpayer on £35,000, contributing 10% via salary sacrifice saves you roughly £420 per year in National Insurance compared to a normal pension contribution. For a higher rate taxpayer, the saving is even larger.

That is £420 of extra pension funding every year that costs you absolutely nothing. Over 30 years at 5% growth, that NI saving alone adds over £29,000 to your pot.

Your employer benefits too (they save on employer’s NI), which is why most companies that offer it are happy to set it up. Ask your HR department.

How I approached it

I will be honest. When I was earning £20,000, I could not afford to save 15%. I contributed the minimum and focused on growing my income. That was the right call at the time.

But as my income grew through Kaizen, I ratcheted up contributions aggressively. By my early 30s, I was maxing my SIPP annual allowance (£40,000 at the time) alongside filling my ISA. My total savings rate across all accounts was well above 50% of my income in the final years before retirement.

That is the FIRE approach, and I know it is not realistic for everyone. But here is what is realistic for almost anyone: increase your contribution by 1% per year. Do it every April, ideally when you get a pay rise. You will not feel the difference. A 1% increase on £35,000 is about £23 a month after tax relief. That is less than a takeaway.

Go from 5% to 6% this year. Then 7% next year. By the time you hit 12% or 15%, you will have adjusted completely and your future self will be hundreds of thousands of pounds better off.

What to do this week

Log into your pension. Check your current contribution rate. If you do not know the login, contact your HR department.
Check your employer match. Make sure you are contributing enough to get the full match. If not, increase to that level immediately.
Ask about salary sacrifice. If it is available and you are not using it, you are paying unnecessary tax.
Increase by 1%. Just 1%. Do it today. Set a reminder to do it again next April.
Run a projection. Most pension providers have a calculator on their website. Plug in your current contribution rate and see where you land at 65. Then try it at 15%. The gap will motivate you.

The pension system is designed for minimum effort and minimum outcomes. The default 8% produces a default retirement. If you want something better, you have to do more. Sound familiar? It is the same in every area of life. The people who end up comfortable are the ones who did not settle for the default.