Contribution matching

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. 

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.

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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 will then be paying £1,600 a year into her pension pot. Her employer has agreed to match Jane’s extra 5% contribution – making their 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.  

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Whatever your circumstances or plans, move forward with MoneyHelper.

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