Pension contributions

Understand workplace pension contributions. Learn what the minimum payments are, and how tax relief works.

What are pension contributions?

Contributions are payments made into a pension. With a workplace pension like People’s Pension, these usually come from three sources:

You, the employee
Your employer
The government

Your employer and the government top up the money you put into your pension. They’re adding extra ‘free’ money to help you build your pension.

Check your pension

What are the minimum contributions?

You must contribute 5% of your salary, and your employer adds 3%. Together, this makes a minimum of 8%, but it’s worth noting that 1% of your contribution is made up of tax relief. Some employers contribute more, so it’s worth checking what your organisation offers.

Learn about pension payments on payslips

What is tax relief?

The government’s contribution comes in the form of tax relief. What you might have spent on tax goes into your pension instead.

Real-life example

Let’s say Lee earns £30,000 per year:

Lee pays £100 each month
The government adds tax relief of £25
The employer pays £75

Total = £200 going into Lee’s pension every month.

How much should I put into my pension?

It is generally a good idea to top up your pension when it suits your circumstances. Your decision will depend on your current situation and the standard of living you’d like in the future. Why not set aside some time to think about your ideal retirement?

Review your current pension

You can do this by checking your account online, or by using our mobile app, to review your current pension. We’ve also got a handy retirement planner tool. It will help you envisage the lifestyle you want to have in later life – and how to make it a reality.

Log in to your account online

Mobile app

Retirement planner tool

5 great reasons to top up your pension

Small increases now can grow significantly over time thanks to the power of long-term growth and compounding.
More contributions mean more tax relief, ‘free’ money working for you.
It boosts your retirement income alongside the State Pension (currently around £241.30 per week).
It often gives better returns than a savings account.
You can access a tax-free lump sum when you retire.

Your questions: answered

There’s no absolute cap on contributions, but paying above certain limits triggers a tax charge, making it less beneficial:

If you earn under £3,600 a year: You can contribute up to £3,600 (including tax relief) and still get tax benefits.
If you earn over £3,600: You can contribute up to 100% of your earnings with tax relief.
Annual allowance: If total contributions exceed £60,000 in a tax year, you’ll pay a tax charge on the excess.

You could start with your employer. Speak to them to see if you can increase your contribution through your payslip. Some employers offer matching contributions, meaning they’ll pay in more if you do – this is an effective way to grow your pension.

Make a one-off personal contribution now and again. Got a bonus, inheritance, or extra income? With People’s Pension, there’s a simple form for personal contributions LINK.

If you left a job where you had a People’s Pension, you can continue your regular addition by Direct Debit. We’ll look after the tax relief and add it to your pension. If you’re a higher-rate taxpayer, you can claim the rest on your tax return.

There are two forms to complete and return to us – then we’ll be in touch to confirm your Direct Debit:

Download Direct Debit mandate form

Download Personal contributions form