Some employers will pay more into your workplace pension if you agree to increase your contributions too. This is known as ‘contribution matching’. It might help you build your retirement savings faster – but make sure you can afford to pay more in.
What’s in this guide
Workplace pensions and contributions
If you’re a member of a workplace pension scheme, your employer might be contributing to your pension pot. Often, employers will contribute a proportion of your salary or wages.
Some employers will agree to pay more into your pension pot if you agree to increase your contributions too.
It’s best to check with your employer to see if they offer this, and the level of contributions they might make.
Most employers will have a limit to the extra contributions that they’ll match.
Can you afford to make extra contributions?
Make sure you can afford any increased contributions. It’s usually possible to reduce your contributions – but you might also lose any extra contributions your employer is making.
Find out more about the types of pension available in our guide The different pensions you can get if you live and work in the UK
Need more information on pensions?
Call our helpline free on 0800 011 3797 or use our webchat. One of our pension specialists will be happy to answer your questions.
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An example of contribution matching
Jane earns £20,000 a year and is a member of her employer’s workplace pension scheme.
She contributes 3% of her salary into her pension pot, and her employer contributes 5%.
Jane’s employer has agreed to match her contributions between 3% and 8% of her salary.
Jane is considering increasing her contributions to benefit from her employer agreeing to match her extra contributions.
Currently, Jane is paying 3% of her salary of £20,000 (£600) into her pension each year, while her employer pays 5% (£1,000) a year.
So, the total contribution paid into her pension pot is £1,600 a year (Jane’s contributions are paid from her salary before tax is deducted).
If Jane increases her contributions to 8% of her salary, she’ll then pay £1,600 a year into her pension pot. Her employer has agreed to match Jane’s extra 5% contribution – making the total extra contributions 10%. This means they’re each paying an extra £1,000 a year
This increases the total contribution to £3,600 a year.
What’s the benefit to Jane?
Before
| - | Base Contribution rate | Base Contribution Amount |
|---|---|---|
|
Jane |
3% |
£600 |
|
Her employer |
5% |
£1,000 |
A total of £1,600 being paid into Jane’s pension if she pays in £600.
After
| - | Base Contribution rate | Base Contribution amount | Matching rate | Matching contribution |
|---|---|---|---|---|
|
Jane |
3% |
£600 |
5% |
£1,000 |
|
Her employer |
5% |
£1,000 |
5% |
£1,000 |
A total of £3,600 being paid into Jane’s pension if she pays in £1,600. That’s an extra £1,000 a year from her employer.
