So how much do you need to pay into a pension for a comfortable retirement? Planning for retirement is one of the most important financial steps any of us will take, yet it’s also one of the most commonly overlooked. Many people assume that simply being enrolled in a workplace pension will be enough to secure a comfortable retirement. Unfortunately, for most, that’s not quite enough on its own, and auto-enrolment alone won’t get them there.
Why auto‑enrolment isn’t enough
Auto-enrolment has been a positive step in getting more people saving for retirement. Under current rules, the minimum total contribution is 8% of qualifying earnings, made up of employee, employer, and tax relief contributions.
The problem is that contributing 8% is far below what’s needed to build a pension pot capable of supporting a comfortable lifestyle. Qualifying earnings may also exclude a portion of income, meaning many people are contributing less than they think.
Most financial experts agree that to maintain a similar standard of living in retirement, people should aim to save 12–15% of their total income throughout their working life. For those who start later, the percentage required is even higher.
How much do you actually need?
The amount needed for retirement depends on lifestyle expectations, but Pensions UK (formerly the Pensions and Lifetime Savings Association, or PLSA) publishes useful Retirement Living Standards benchmarks for the UK:
Minimum lifestyle: £13,900 per year
Moderate lifestyle: £32,700 per year
Comfortable lifestyle: £45,400 per year
To achieve a moderate retirement, a typical person may need a pension pot of around £400,000–£500,000, alongside the full State Pension. For a comfortable retirement, the target rises to £600,000–£750,000 or more.
These figures may sound daunting, but they highlight the importance of starting early and contributing consistently. Our pension calculator can give you a quick sense of whether you’re on track.
How much should you contribute?
A simple rule of thumb often used by advisers is:
Take your age, halve it, and contribute that percentage of your salary.
For example:
At age 30 → contribute 15%
At age 40 → contribute 20%
This isn’t perfect, but it illustrates the need to increase contributions as you get older.
If your employer offers to match contributions above the minimum, take full advantage and say yes, as this is effectively free money.
The self-employed: a forgotten group
The self-employed face an even bigger challenge. Without auto-enrolment, employer contributions, or structured pension schemes, many simply don’t save enough.
Around one‑third of self‑employed people have no pension savings at all.
For the self‑employed, the responsibility is entirely personal. A good starting point is to:
- Set up a personal pension or SIPP
- Aim to contribute at least 15% of profits
- Increase contributions in strong business years
- Treat pension contributions as a non‑negotiable business expense
Tax relief makes pension saving particularly attractive for the self-employed, but only if they take action.
The bottom line
Relying on auto-enrolment alone is unlikely to deliver the retirement most people want. A comfortable retirement requires deliberate planning, higher contributions, and regular reviews. Whether employed or self-employed, the key is to start early, save consistently, and increase contributions whenever possible. Your future self will thank you. If you’re not sure where you stand, it’s worth talking it through with an adviser.