Pensions are the most tax-efficient savings vehicle available to most UK employees. The combination of tax relief and employer contributions makes them uniquely powerful.

Why pensions come early in the priority order

1. Employer matching is a 100% guaranteed instant return on your contribution up to the matching limit. No investment comes close.
2. Tax relief means every £80 you contribute (basic rate taxpayer) costs you only £80 but £100 lands in the pension. Higher-rate taxpayers get even more.
3. National Insurance savings — salary sacrifice reduces your NI contributions as well as income tax.

Employer matching

Your employer offers to match contributions up to a percentage of your salary. For example, “we match 5%” means if you contribute 5%, the employer also contributes 5% — effectively doubling your money before it is invested.

Always contribute at least enough to get the full employer match. Anything less is leaving salary on the table.

Salary sacrifice

Salary sacrifice means your pension contribution is taken from your gross pay before income tax and National Insurance are calculated. This reduces your taxable income, giving you:

• Income tax relief at your marginal rate (20%, 40%, or 45%).
• National Insurance relief (typically 8–12%).

Example (basic rate taxpayer): Contributing £100/month via salary sacrifice actually costs you around £68 take-home pay, because you avoid 20% income tax and ~12% NI on that £100.

Check with your employer’s HR whether salary sacrifice is available on your scheme.

Types of pension

Most new employees are in DC schemes. If you have a DB pension, the terms are set by your employer — consult a financial adviser before making changes.

How much to contribute

After capturing the full employer match, the right contribution rate depends on:

• Your marginal tax rate (higher earners benefit more from pension contributions).
• Your retirement age and target retirement income.
• Whether an ISA or pension is more flexible for your goals.

General guidance: aim for a total contribution rate (employee + employer) of at least 12–15% of salary.

Tracking your pension in WealthMgr

1. Add a pension account: Accounts → Add account, type: Asset, subtype: Pension.
2. Set the opening balance to your current pot value.
3. Update the balance each time your pension provider sends a statement.
4. Use Projections with a what-if rule to model the impact of increasing contributions.

State pension

The UK State Pension (currently ~£11,500/year for a full entitlement) supplements your private pension. Check your National Insurance record at gov.uk/check-state-pension to see your forecast.