Question 1

How much should I contribute to my pension?

Accepted Answer

Auto-enrolment minimums are 5% employee + 3% employer (8% total) of qualifying earnings. Most financial planners suggest targeting 10–15% of gross salary in total contributions. The earlier you start, the less you need to save each month due to compound growth.

Question 2

What is the difference between salary sacrifice and relief-at-source pension contributions?

Accepted Answer

Salary sacrifice reduces your gross pay before tax and National Insurance are calculated, saving both income tax and NI on contributions. Relief-at-source takes contributions from net pay and HMRC adds 20% basic-rate tax relief — but no NI saving. Salary sacrifice typically produces a larger take-home pay.

Question 3

How is the pension pot projection calculated?

Accepted Answer

The projection compounds contributions monthly at your chosen annual growth rate. Each month adds your contribution plus your employer match, then applies (1 + annual rate / 12) growth. This is a simplified model — real fund returns vary, charges apply, and future rates are not guaranteed.

Question 4

What is a realistic pension growth rate to use?

Accepted Answer

UK pension funds have historically averaged 5–7% annual growth before charges. After typical fund charges of 0.5–1%, a real growth rate of 5–6% is commonly used for long-term projections. The default of 7% is optimistic — consider modelling at 5% for a more conservative estimate.