/ Money

How much should you be paying into your pension?

Treasure chest against blue background

There’s been a lot of noise about how much to pay into your pension this year. We’re all getting more freedom in how we spend our pension pot when we come to retire. But are we saving enough?

Figuring out what the changes to pensions mean for you is one thing, finding the money to put away to build a pension fund is another.

Our new pension guide, looking at how much you need to save, is designed to help.

We asked our members how much they thought they needed to live on for a comfortable retirement. The average amount was £18,000 per year.

Similarly, a NEST survey showed that pensioners’ sense of satisfaction with life increased markedly for those with income of £15,000-£20,000 and above.

So, how much to pay into your pension?

So people have pretty high expectations of what they’ll need in retirement.

We calculated how much you’ll need to start saving at different ages to have £15,000 or £30,000 per year in retirement. This included the state pension and assumed that you’d get nothing in the way of company contributions.

How much do I need to save for my pension illustration

At 35, you’ll need to squirrel away £215 a month for £15,000 and £654 for £30,000. By your mid-40s, you’ll need to be saving £322 and £981 per month respectively.

The state pension counts for a smaller proportion of the £30,000, so the savings needed are three times, rather than double, those required for £15,000.

The numbers are quite scary. With all the will in the world, is it possible to put these amounts away each month for a happy retirement with all the other demands on our income? Or is this just the new reality?


Tax relief on payments made into occupational and private pension schemes amounts to around £41bn apparently. If that tax relief was instead used to fund the state pension, it would give around £100 a week increase. Hope these figures are correct but, if so, might help a great deal in easing the plight of the elderly. Those earning still have the opportunity to save, also knowing that a better basic pension awaits them on top of their own provision.

Plumage says:
11 January 2018

One things that people haven’t considered is that the financial requirements in old age are far less than you might think. Usually you have paid for your home. My mother for example has an after tax pension of £20K however, she calculates that she spends only a tiny proportion of this on living (and she lives well) consequently she has free money to spend up to 12K per year on holidays. My mother says pension companies massively overstate the amount of money you will need. (that said it makes sense to save).
I myself am someone who lives on very little money now and I calculate that I would be able to survive on the state pension alone once my property is paid for. It helps that I don’t drink or smoke. Remember too that you may get free local transport (so potentially get rid of your car). For people on low incomes it just isn’t feasible to save enough to provide a large pension for a third of your life.