Getting started made simple.
The quick answer
- Join your workplace pension if you can. Your employer adds money too. That is free money—do not miss it.
- No workplace scheme? Open a personal pension (often called a “self-invested personal pension”) with a reputable provider online.
- Automate it. Set a monthly direct debit, start small, and nudge it up each year.
- Pick a ready-made fund unless you love research. Keep fees low.
- Claim all the tax relief you’re due. Basic-rate relief is added for you; higher-rate taxpayers usually claim the extra through Self Assessment.
- Review once a year. Check fees, contributions, and investment mix.
What is a pension?
A pension is a tax-advantaged pot you build during your working life and draw from later.
- Money in: You (and often your employer) pay in. The government gives tax relief, which boosts your payments.
- Growth: Investments grow without UK Income Tax or Capital Gains Tax inside the pension.
- Money out: From a set age (currently 55, rising to 57 from April 2028), you can usually take up to 25% tax-free, with the rest taxed as income when you withdraw.
Choose a pension provider
- If employed: Your employer must usually offer a pension. Joining is almost always best because of the employer contribution.
- If self-employed or topping up: Open a personal pension directly with a provider. Look for:
- Low, transparent fees (platform charge plus fund charge).
- Simple, ready-made investment options you can set and forget.
- Good tools and service (clear app, valuations, support).
- Existing pensions: You can transfer old pots to tidy up—check exit fees and guarantees first.
Set up regular contributions
- Automate monthly. Even £50–£100 gets the habit going.
- Turn on “increase every year.” Bump contributions after pay rises (for example +1–2 percentage points).
- Capture the employer match. If your firm matches 5%, pay at least 5%.
- Salary sacrifice (salary exchange). Swapping pay for an employer pension payment can save Income Tax and National Insurance. Ask HR how it works and whether they share their National Insurance saving with you.
Do you need advice—or can you do it yourself?
- You can do it yourself if your situation is straightforward and you are happy with a ready-made, broadly diversified fund.
- Consider regulated financial advice if you have: multiple pensions to consolidate, complex tax, very high contributions, or you feel unsure.
- Free guidance: MoneyHelper (government-backed) explains the basics; “Pension Wise” appointments (age 50+) help at retirement stage.
How to pick your investments (or use a ready-made fund)
- Easiest route: Choose a ready-made multi-asset or “target-date” fund.
- It spreads money across shares and bonds worldwide.
- Risk level is set for you; target-date options gradually get steadier as you near retirement.
- Want to build your own?
- Keep it simple: one global share index fund + one global bond fund at a mix that suits your nerves and timescale.
- Rebalance once a year back to your chosen mix.
- Golden rule: Costs matter. The lower the fee, the more stays invested for you.
How to claim your tax relief
- Personal pensions using “relief at source”: You pay a net amount; your provider claims basic-rate relief and adds it to your pot automatically.
- Higher-rate or additional-rate taxpayers: Claim the extra through Self Assessment or ask HMRC to adjust your tax code.
- Workplace schemes that take contributions before tax (“net pay”): Your contribution is taken from pay before Income Tax, so you get full relief via payroll.
- Salary sacrifice: Because your employer pays in on your behalf, the tax and National Insurance saving shows up in your take-home pay rather than as a top-up in the pension.
Keep an eye on fees from day one
- Platform or provider fee: Often a small percentage of your pot or a flat fee.
- Fund fee: The ongoing charge for the fund itself.
- All-in cost target: As low as you can sensibly get it—every 0.5 percentage point saved can mean thousands more over decades.
- Avoid pricey add-ons you do not need (research packages, frequent trading).
A 30-minute setup plan
- Join your workplace scheme (or choose a personal pension).
- Set a monthly direct debit you can stick with.
- Pick a ready-made diversified fund.
- Make sure you get all tax relief due for your rate of tax.
- Switch on an annual contribution increase.
- Save your login and set a calendar reminder to review in 12 months.
Common pitfalls (and easy fixes)
- Missing the employer match. Pay at least enough to get every pound they offer.
- Leaving money in cash for years. Pick an investment fund—cash is for short-term needs.
- Forgetting to claim higher-rate tax relief. Put it on your to-do list after the tax year ends.
- Paying high fees by accident. Check the all-in cost: platform + fund + any extras.
- Stopping contributions after a market wobble. Keep going; the price dips are often when you buy more for the same money.
Important
This is education, not personal advice. Rules and allowances change, and what is right for you depends on your circumstances. If unsure, consider speaking to a regulated financial adviser.
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