Personal Pension Schemes

3. How Much to Pay In?

3.1 The general rule is to pay in as much as possible, as rising life expectancy means retirement can last a long time.

• Ideally, you might plan to start paying 15 to 20 per cent of your salary into your pension before age 25, in the hope of getting a pension of two-thirds of your final salary by the time you are in your late 60s.
• The minimum you can invest in most personal pensions is £50 monthly, or £500 to £1,000 as a lump sum. You can invest smaller amounts in stakeholder pensions.

3.2 In theory, you should start contributing to a pension as soon as possible.

• A five year delay in starting a pension, for example, from 40 to 45, could reduce your final pension by almost 40 per cent.
• You may be able to make lump sum payments as well as your regular contributions, now that the rules have changed to allow you to claim tax relief on up to 100 per cent of your earnings.