Workers who resist spending all of a pay rise could potentially add £50,000 to their pension pot, according to new figures from Standard Life.
More than one in three workers with a workplace pension increased their contributions the last time their income went up. Putting just 2% more of their salary into a pension from age 30 could make a dramatic difference by retirement.
Projected pension growth
Standard Life calculates that someone starting work at 22 on a £30,000 salary could build a pension pot worth around £252,000 by age 68 if they paid the minimum 5% employee contribution alongside a 3% employer contribution.
Increasing their own contribution from 5% to 7% from age 30 could take the projected pot to £302,000 - an extra £50,000. Someone increasing their contribution to 9% from age 30 could potentially build a pot of around £353,000, which is £101,000 more than under the minimum contribution assumptions.
Even leaving it until 40 could make a substantial difference, with a four percentage-point increase producing a projected pot of £324,000 - £72,000 more.
Research findings
The calculations are only illustrations and are not guaranteed, but they highlight the potentially huge impact of making relatively small increases to pension contributions early in a career. The amount sacrificed from take-home pay can be less than the headline pension contribution because of tax relief and, for workers whose employers offer it, salary sacrifice.
Research by Standard Life found that 34% of people with a Defined Contribution pension increased their contribution the last time their income rose. A further 19% considered doing so. That means more than half - 53% - either acted or thought about putting more into their pension after a pay rise, promotion, bonus or job change. However, 28% did not even consider increasing their contribution rate.
Expert advice and considerations
Emma Furlonger, managing director for Workplace and Retail Intermediary at Standard Life, said a pay rise could be an opportunity to strengthen retirement savings.
“You don’t have to direct your entire pay rise into your pension,” she said. “If it’s affordable, putting aside a small proportion before becoming accustomed to the additional pay can be a manageable way to strengthen your retirement savings while still enjoying the benefit of earning more.”
Workers should check whether their employer will match additional pension contributions, as this can provide an extra incentive to increase the amount they save. It is also worth checking whether salary sacrifice is available. This allows some workers to give up part of their salary in return for an employer pension contribution and can reduce the amount of National Insurance they pay.
Pension tax relief can also make the cost of saving less than it first appears. Standard Life says a £100 pension contribution could effectively cost £80 for a basic-rate taxpayer or £60 for a higher-rate taxpayer, depending on how the tax relief is applied and subject to the relevant rules and allowances.
But putting more into a pension is not necessarily the right move for everyone. Standard Life says workers should consider expensive debts, essential costs and emergency savings before increasing their pension contributions. The research was carried out by Opinium among 4,000 UK adults between August 11 and August 18, 2026.
