How much should I pay into my pension?

In the current tax year (2024/25), the annual allowance is capped at £60,000 and applies across all your pension savings (excluding State Benefits), not per scheme. If the contributions to your pensions exceed the annual allowance, a tax charge ('the annual allowance charge') may become payable. This effectively claws back any excess tax relief given at source. If your taxable earnings in the year are below the annual allowance then tax relief on pension contributions from all sources is limited to 100% of your earnings (or to £3,600 if you have no earnings).

All employers must offer a workplace pension scheme by law and make contributions - as long as you're eligible for automatic enrolment. However, you do not have to pay into a pension if you don't want to and you can decide to opt out. You should carefully research and consider all your options before making this decision.

As you get tax relief on your pension, you might want to think about paying extra into your pension each month. Even 1% can make a big difference over time as the earlier you invest your money, the more time it has to grow, although this is not guaranteed.

In theory, you can put as much as you like into your pension. However, there are limits as to how much you can pay in while still getting full tax relief (a government tax-break intended to encourage you to save for your retirement). Pension allowances are a complicated area, but you can find out what the limits are and how to make the most of them here.