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You might think you’re already contributing enough to your pension, but if you’re able to spare another £25 a week, you might be able to boost your retirement savings by another £26,400 by the time you stop work.
It’s understandable that many of us in our 50s and 60s think that paying a little extra into our pensions each week isn’t likely to make that much of a difference to our retirement savings, especially if we’ve only got a few years left until we stop work.
However, you might be surprised to learn that even squirrelling a few pounds extra a week away can mean you end up with a substantially bigger pension pot at retirement. Here’s what you need to know.
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If you’re considering seeking professional financial advice on the options available to you, we’ve partnered with nationwide Chartered independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial adviser. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 2,600 reviews on VouchedFor, the review site for financial advisers.
Small changes can make a big difference
If you’re currently paying into a workplace pension, your employer will usually contribute alongside you under auto-enrolment rules. The minimum total contribution is generally 8% of qualifying earnings, with at least 3% coming from your employer. The remainder is usually paid by you, with tax relief helping to boost the amount going into your pension. You can learn more about this in our article How does pension auto-enrolment work?
If you can afford to increase your contributions above the minimum, it could give your pension savings a useful boost. It’s particularly worth checking whether your employer will match your additional contributions, as this could mean you receive extra money from your employer as well as benefiting from tax relief and any investment growth.
Let’s take someone aged 55 and earning £40,000 a year who is considering increasing their pension contributions by £100 a month, or around £25 a week. If the £100 is the gross amount going into their pension, this would amount to £1,200 a year, or £15,600 over 13 years, before investment growth.
Fidelity’s Power of Small Amounts calculator estimates that an extra £100 a month could build an additional pension pot of around £26,400 by age 68, based on assumptions including 5% annual investment growth and 3.5% annual salary growth.
Bear in mind that the projected £26,400 isn’t guaranteed. Your actual pension pot will depend on factors including how much you contribute, investment performance, charges and how long your money remains invested.
However, based on the above assumptions, even if you can afford a lower additional contribution of, say, around £8 a week or £33 a month, you could end up with an extra £8,800 to enjoy life if you retire at 68, based on the same assumptions. Bear in mind that these are illustrations rather than a guaranteed outcome, and the actual amount you end up with will depend on investment performance and the charges you are paying.
How much should you be paying into your pension?
Working out how much to put into your pension can be difficult, particularly when you’re juggling other financial priorities. There isn’t a magic figure that will work for everyone, so the amount you contribute needs to be affordable alongside your other household costs and financial commitments.
One rule of thumb often used by pension experts is to take the age at which you begin saving, halve it, and use this as the percentage of your salary you aim to contribute. For example, if you start building your pension at 50, this approach would suggest targeting contributions of around 25% of your salary.
Jemma Slingo, Investment and Pensions Specialist at Fidelity International, said: “Remember this is just a benchmark, not a hard-and-fast rule. Everyone’s retirement ambitions look different. Some people want the option of retiring early or funding more luxuries later in life, while others may simply want the reassurance of covering the essentials.
“It’s also normal for contributions to increase and decrease with your circumstances – you might start small and increase with pay rises or bonuses. Don’t worry if you’re not always hitting the ‘half your age’ mark; building the habit and adjusting when you can matters most.”
Your priority should be to focus on what you can comfortably afford. Even increasing your pension contribution by a relatively small amount each month could give your retirement savings a useful boost, particularly if you’re able to maintain the higher contribution over a number of years.
Learn more in our article How much should I pay into my pension?
Check your State Pension forecast too
Before deciding how much more you need to put into a private or workplace pension, it can be useful to check how much you could receive from the State Pension.
Your State Pension will usually form a significant part of your retirement income, so knowing what you’re likely to receive can help you work out how much additional income you may need from your other savings. Learn more in our guide: How can I get a State Pension forecast?
Don’t forget pension allowances
Before increasing your pension contributions, it’s important to check that you’re not exceeding your pension allowances.
If you have a defined contribution (DC) pension, you can generally contribute up to 100% of your relevant UK earnings in a tax year and receive tax relief, subject to the Annual Allowance, which is £60,000 in the 2026/27 tax year.
The rules work differently if you have a defined benefit (DB) or final salary pension. In this case, the Annual Allowance is based on the amount by which the value of your pension benefits has increased during the tax year, rather than simply the contributions you or your employer have made.
If you haven’t used all of your Annual Allowance in the previous three tax years, you may also be able to carry forward the unused amount, provided you were a member of a registered pension scheme during the relevant year. This can be particularly useful if you want to make a larger pension contribution in a particular tax year. For more information, see our guide: Pension carry forward explained.
If you still exceed your available allowance after using any carry forward, the excess is subject to an income-tax charge. The rate depends on your taxable income and the amount of the excess, with the charge potentially applying at 20%, 40% or 45% (with different rates potentially applying for Scottish taxpayers).
For example, if someone has an available Annual Allowance of £60,000 but their pension savings for the year come to £70,000, £10,000 would be subject to the Annual Allowance charge. You can find out more in our guide: How do pension allowances work?
A final thought…
You don’t necessarily need to make a dramatic change to your pension contributions to make a big difference to the amount you could end up with at retirement.
An extra £25 a week may not sound like a huge amount, but keeping additional money invested for a number of years gives it the potential to grow.
The key is to make sure any increase is affordable and fits alongside your other financial priorities.
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If you’re considering seeking professional financial advice on the options available to you, we’ve partnered with nationwide Chartered independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial adviser. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 2,600 reviews on VouchedFor, the review site for financial advisers.
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