What You Pay In

In most schemes you and your employer pay in a fixed percentage of your earnings.

The amount you pay in can vary from nothing up to 40%. Above 19% you get no tax relief on your contributions, so they become less attractive. (see http://www.dailymail.co.uk/femail/article-31760/How-pay-pension.html)

Your employer usually contributes as much as or more than you, sometimes very much more. In some schemes, notably the civil service scheme, the employer pays the whole cost; you pay nothing. (https://www.gov.uk/tax-national-insurance-after-state-pension-age/calculating-tax-and-national-insurance-)

When you approach retirement, you can usually pay extra contributions from your final years' salaries.

These extra amounts are called additional voluntary contributions. As long as you do not exceed the limit of 19 % of total earnings, you get full tax relief on these contributions and they can boost your final pension considerably. There is a slightly higher limit for the self employed.


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