Master pension planning with up-to-date 2025 rules, tax relief strategies, and retirement calculators. Build a £1M+ pension pot.
Annual Allowance
£60,000
Maximum tax-free pension contributions per year
Lifetime Allowance
ABOLISHED
No longer limited! (Was £1,073,100)
Access Age
55 (57 from 2028)
Minimum age to withdraw from private pensions
State Pension
£11,502/year
Full State Pension for 2025/26 (needs 35 years NI)
A pension is a long-term savings plan designed for retirement. The UK government incentivizes pension saving through generous tax relief - effectively giving you free money. Your pension is locked until age 55 (57 from 2028) to ensure it's there when you retire.
💡 The Power of Pensions:
If you're a basic rate taxpayer, every £80 you contribute becomes £100 (government adds £20). For higher rate taxpayers, every £60 becomes £100 (government adds £40). Plus, your employer typically adds 3-5% on top. That's 40-60% instant returns before any investment growth!
Employer-sponsored pension scheme with automatic enrollment and employer contributions
Contributions
Minimum 8% total (5% you + 3% employer)
Tax Relief
20-45% automatic
Access Age
Age 55 (rising to 57 in 2028)
Tax relief means the government tops up your pension contributions. The higher your tax rate, the more free money you get!
25% instant return!
67% instant return!
82% instant return!
💡 Pro Tip:
Higher and additional rate taxpayers get 20% tax relief automatically, but must claim the extra 20-25% through their tax return or by calling HMRC. Don't miss out on this free money!
Standard Limit
£60,000/year
High Earners (£260k+ income)
Tapered (min £10k)
Carry Forward
3 previous years
Tax-Free Lump Sum
25% (up to £268,275)
Remaining 75%
Taxed as income
Minimum Age
55 (57 from 2028)
| Feature | Pension | ISA | Cash Savings |
|---|---|---|---|
| Tax Relief on Contributions | 20-45% | None | None |
| Employer Contributions | |||
| Annual Limit | £60,000 | £20,000 | Unlimited |
| Tax on Growth | None | None | 20-45% |
| Flexible Access | Age 55+ | Anytime | Anytime |
| 25% Tax-Free Withdrawal | |||
| Best For | Retirement (55+) | Goals (any age) | Emergency fund |
Estimate how much you'll have at retirement
Estimated Pension Pot at Retirement
£1,048,015
Always contribute enough to get full employer match. If your employer offers 5%, contribute 5%. It's literally free money - a guaranteed 100% return!
Ask your employer about salary sacrifice. You save on National Insurance (12%) as well as income tax, boosting contributions by an extra 12-14%.
A 25-year-old contributing £200/month until 65 will have MORE than a 40-year-old contributing £500/month. Time is your biggest advantage.
Transfer old workplace pensions into a low-cost SIPP. Easier to manage, lower fees, and you can choose your investments.
Every time you get a pay rise, increase your pension contribution by 1-2%. You won't miss the money and your future self will thank you.
If you have unused pension allowance from the last 3 years, you can contribute more than £60k this year. Great for bonuses or windfalls.
If your employer offers 5% but you only contribute 3%, you're leaving free money on the table. This is the #1 pension mistake.
Unless you're in serious financial hardship, never opt out. You lose employer contributions and tax relief - typically 50-70% instant returns.
Old workplace pensions often charge 1-2% fees. Move to a low-cost SIPP (0.15-0.45% total) to save tens of thousands over your lifetime.
If you're a 40% or 45% taxpayer, you must claim the extra relief via self-assessment. Don't miss out on 20-25% free money!
The average person has 11 jobs in their lifetime. Track down old pensions and consolidate them into one low-cost SIPP for easier management.
Just because you CAN access your pension at 55 doesn't mean you SHOULD. It needs to last 30-40 years. Consider waiting until at least 60.
What is the annual allowance for pension contributions in 2025?
Track your pension, forecast retirement income, and get AI-powered optimization tips with TrioWealth