How workplace pensions work
Auto-enrolment (introduced 2012) means most UK employees are automatically enrolled in a workplace pension. The minimum contribution is 3% from the employer and 5% from the employee (total 8% of qualifying earnings). The money is invested in funds managed by the pension provider and grows tax-free. Crucially: not contributing enough to get the full employer match is leaving free money unclaimed. Always contribute at least enough to get the full employer match.
The state pension
The full new State Pension is £221.20/week (2024–25) — approximately £11,500/year. You need 35 qualifying National Insurance years for the full amount. Check your State Pension forecast at gov.uk using the 'Check your State Pension' service. Gaps in NI contributions (for career breaks, self-employment) can often be filled voluntarily — this is frequently excellent value.
Why starting early matters so much
A pension pot of £500/month started at 25 grows to approximately £1.8 million by 65 (at 7% average annual growth). Starting at 35 with the same contribution produces approximately £920,000. Starting at 45: approximately £430,000. The 20-year head start nearly doubles the outcome. Use our free pension tracker to see what you're building.
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