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Calculated on full salary for simplicity; auto-enrolment minimums (5% employee including tax relief, 3% employer) legally apply to qualifying earnings between 6,240 and 50,270 GBP, so statutory-minimum schemes contribute slightly less than shown. Tax relief shown at your marginal rate; higher-rate relief may need claiming via self assessment in relief-at-source schemes. Not financial advice.
What The Pension Contribution Calculator Works Out
- Going into your pension monthly: your percentage plus your employer's percentage of salary, divided by 12. On a GBP 35,000 salary at the auto-enrolment pattern of 5% employee and 3% employer, about GBP 233 a month enters the pension.
- Real monthly cost to you: your contribution minus tax relief at your marginal rate. A basic-rate taxpayer putting in GBP 146 a month genuinely gives up only about GBP 117; higher-rate payers in relief-at-source schemes must claim their extra 20% through self assessment, and large amounts go unclaimed every year.
- Free money: the employer contribution plus the tax relief, which together roughly double what the contribution costs you before any investment growth. Opting out to save money forfeits all of it.
- Contributions calculated on (advanced): the strict legal minimum applies only to qualifying earnings between GBP 6,240 and GBP 50,270, so a statutory-minimum scheme on GBP 35,000 contributes on GBP 28,760 rather than the full salary. Better employers calculate on full salary and many match above the minimum.
- How relief is given (advanced): salary sacrifice swaps pay for an employer contribution, so you also save employee National Insurance (8% below GBP 50,270, 2% above) on the amount given up, and your employer saves 15% employer NI, which some pass on.
- Employer matches up to (advanced): the "unclaimed employer match" card shows how much free employer money you leave on the table if you contribute below the ceiling the employer will match. A 5-for-5 match is an immediate 100% return.
- Tax relief per year (advanced): the annual value of relief on your own contributions. Contributions attract relief up to the GBP 60,000 annual allowance for most people.
- Projected pot at retirement (advanced): the monthly total compounded at the growth rate for the years entered, with contributions rising each year by the salary rise percentage. Guidance often suggests a total rate of about half your age when you start, so starting at 30 means aiming near 15%; every extra GBP 100 a month at 30 plausibly adds six figures by retirement.
Source and further reading: GOV.UK: workplace pensions.