The legal minimum is 8% of qualifying earnings, of which your employer pays at least 3%. On a £30,000 salary that is about £1,900 a year, or £158 a month, and it is not enough on its own to fund a moderate retirement. Reaching the PLSA’s moderate standard of £32,700 a year for a single person needs a pot of roughly £504,000 alongside the full State Pension, which means about £549 a month from age 27, £871 from 37, or £1,541 from 47, on the assumptions set out below. The figures are a framework for the decision, not a recommendation, because the right amount depends on what you want retirement to look like and what you can afford now.
Start with the minimum, and know what it buys
Automatic enrolment requires a total contribution of 8% of qualifying earnings, the slice of pay between £6,240 and £50,270 a year, for workers earning £10,000 or more aged 22 to State Pension age. The employer must pay at least 3% and the employee makes up the rest, with basic rate tax relief included.
| Salary | Qualifying earnings | Total 8% a year | Of which employer 3% |
|---|---|---|---|
| £25,000 | £18,760 | £1,501 | £563 |
| £30,000 | £23,760 | £1,901 | £713 |
| £45,000 | £38,760 | £3,101 | £1,163 |
| £60,000 | £44,030 | £3,522 | £1,321 |
Because the band is capped at £50,270, the minimum stops growing with salary above that point. Anyone on £60,000 contributing the bare minimum is saving 5.9% of pay, not 8%. The pension contribution calculator shows the minimum and the real cost after tax relief for any salary.
Work back from the retirement you want
The Pensions and Lifetime Savings Association publishes three Retirement Living Standards for a single person outside London: £13,900 a year for a minimum standard, £32,700 for moderate and £45,400 for comfortable. The full new State Pension of £241.30 a week, about £12,548 a year, covers most of the minimum on its own.
For the moderate standard, the State Pension leaves £20,152 a year to come from your own savings. At a sustainable withdrawal rate of 4%, that needs a pot of about £504,000 in today’s money.
| Years until retirement | Monthly saving needed for a £504,000 pot |
|---|---|
| 40 (from age 27 to 67) | £549 |
| 30 (from age 37) | £871 |
| 20 (from age 47) | £1,541 |
The table assumes 3% growth a year above inflation, contributions rising with inflation, and no pot to begin with. Employer contributions count towards the monthly figure, so someone whose employer pays 5% of a £40,000 salary already has £167 a month of the £549. The retirement income target calculator reruns these numbers for any target, age and existing pot, and the pension pot projection shows the path year by year.
The half-your-age rule of thumb
A common shorthand says to contribute a percentage of salary equal to half your age when you start, including the employer’s share: 12% from 24, 15% from 30, 20% from 40. It is a heuristic rather than a rule, and it has the same weakness as any rule of thumb: it ignores your existing pot, your State Pension position and what your employer adds. Against the table above it holds up reasonably well for a middle earner starting in their twenties or thirties, and understates the need for anyone starting later with nothing saved.
Why the cost is lower than the contribution
Pension contributions attract tax relief at your marginal rate, and under salary sacrifice they save National Insurance as well. A £100 contribution costs a basic rate taxpayer £80 of take-home under relief at source, £72 under salary sacrifice; a higher rate taxpayer £60 or £58. Between £100,000 and £125,140, where the personal allowance is withdrawn, the same £100 costs as little as £38. The pension tax relief calculator shows the figure for your salary, and Is salary sacrifice worth it? compares the methods.
Two other rules shape the decision at the top end. The annual allowance limits tax-relieved contributions to £60,000 a year including employer contributions, with unused allowance from the previous three years available to carry forward. Anyone who has already taken taxable money from a defined contribution pension is limited to the £10,000 money purchase annual allowance instead.
The order that usually makes sense
- Take the whole employer match. If your employer will pay 6% when you pay 6%, the difference between 5% and 6% of your own money is worth more than any other saving you can make, because each extra pound is matched.
- Clear expensive debt before going beyond the match. A credit card at 24.9% costs more than a pension is likely to earn, so the credit card payoff calculator comes before the pension calculator for anyone carrying a balance.
- Keep an emergency fund outside the pension. Pension money cannot be reached before 57 (from April 2028; 55 until then), so three months of essential spending belongs in cash first.
- Then raise the pension contribution towards the target. A 1% increase each year, or half of every pay rise, gets most people to the moderate figure without a visible cut in take-home, because the rise absorbs it.
- Use salary sacrifice if the employer offers it. The National Insurance saving is 8% for a basic rate taxpayer and comes at no cost to the pension.
What a £30,000 earner might do
Someone on £30,000 with an employer paying the 3% minimum and no existing pot, 30 years from retirement, is saving £1,901 a year under auto-enrolment, about £158 a month including the employer’s share. The moderate target needs £871 a month. Raising the personal contribution from 5% to 10% of qualifying earnings takes the total to £3,089 a year, £257 a month, at a cost of roughly £79 a month in take-home under relief at source. It does not close the gap, but it more than doubles the eventual pot, and a 1% rise each year for the next decade would take the total contribution to around 18% of qualifying earnings. The take-home pay calculator shows what each contribution rate leaves in your account each month.
Common questions
What percentage of my salary should I put into my pension? The minimum is 8% of qualifying earnings including the employer’s 3%. Reaching a moderate retirement from scratch typically needs 12% to 20% of salary depending on when you start and what your employer adds. The tables above give the pounds.
Is 8% enough? For most people, no. On £30,000 it produces about £1,900 a year, against a saving of around £10,000 a year needed for a moderate retirement starting at 37 with no pot. It is a floor, not a target.
How much do I need in my pension pot to retire? About £504,000 for a single person’s moderate standard alongside the full State Pension, on a 4% withdrawal rate; less if you own your home outright or will have other income, more for the comfortable standard.
Does my employer’s contribution count? Yes. All the targets above are total contributions. Add your employer’s percentage to your own before comparing.
What is the maximum I can pay in? Tax relief is available on contributions up to the £60,000 annual allowance, including employer payments, or 100% of your earnings if lower, with unused allowance from the previous three years available to carry forward.
Should I pay off my mortgage or pay into my pension? The pension usually wins on tax grounds while your employer is matching and while your mortgage rate is modest, because relief of 20% to 40% plus the employer’s money is hard to beat. Above the match, the answer depends on the mortgage rate, your tax band and how much you value being debt-free; the overpay or invest calculator puts the numbers side by side.
Information, not financial advice. Contribution minimums and allowances are the published 2026/27 rules on gov.uk; Retirement Living Standards are from the PLSA; projections use stated assumptions and are illustrations, not forecasts. Pension decisions depend on personal circumstances, so consider regulated advice before acting on them.