WealthilyYours Empowering You to Grow, Invest, and Thrive
What Percentage of Salary Should Go to Pension is one of the most frequently asked, and often misunderstood, financial planning questions in the UK. Whether you’re just starting your career or approaching retirement, understanding what percentage of salary should go to pension can make the difference between a comfortable future and financial uncertainty.
In this guide, we break down what percentage of salary should go to pension for different income levels and employment types, including NHS workers, tech professionals, and entrepreneurs. From workplace pensions to SIPPs, knowing what percentage of salary should go to pension at each career stage is essential.
Also Read: https://wealthilyyours.com/8-pointer-review-of-hargreaves-lansdown-sipp/
This article explores realistic benchmarks, strategic tips, and how to personalize the answer to what percentage of salary should go to pension for your own goals. If you’ve ever wondered what percentage of salary should go to pension in order to retire confidently in the UK, you’re in the right place.
Planning for retirement is one of the most critical financial decisions you’ll make during your working life. In the UK, while the state pension provides a foundation, it’s rarely sufficient on its own to maintain a comfortable retirement lifestyle.
How much you should contribute to your pension often depends on your earnings, job type, and long-term goals. In this article, we explore recommended pension contributions for three different salary levels: an NHS nurse earning £40,000, an IT professional earning £50,000, and a business owner with a £60,000 income.
Why Pension Contributions Matter
The earlier you start contributing to your pension, the more time your money has to grow through compounding. The general rule of thumb in the UK is to aim for a contribution rate of half your age at the time you start, as a percentage of your salary. For instance,
Also Read: https://wealthilyyours.com/sipp-vs-workplace-pension/
if you begin saving at 30, you should try to put away at least 15% of your income annually toward your pension. This includes both employee and employer contributions.
Case Study 1: NHS Nurse – £40,000 Salary
Pension Type: NHS Pension Scheme (Defined Benefit)
NHS workers are automatically enrolled in the NHS Pension Scheme, which is a defined benefit (DB) pension, considered one of the most generous public sector pensions in the UK. Unlike private pensions, DB pensions offer a guaranteed income in retirement, based on career average earnings and length of service, rather than contributions and investment growth.
Contribution Structure:
- Employee contribution: Approximately 9.3% (for a £40,000 salary)
- Employer contribution: 20.6%
- Total effective contribution: ~30%
Should More Be Contributed?
For many NHS employees, the scheme is already quite robust. However, if the goal is to retire early or maintain a higher lifestyle standard, additional savings through a Lifetime ISA (LISA) or private SIPP (Self-Invested Personal Pension) could supplement the NHS pension.
Also Read: https://wealthilyyours.com/is-it-worth-paying-into-a-pension-for-only-5-years/
Recommended Action: Stick with the NHS scheme, but aim to save an extra 3–5% in a personal pension or LISA if early retirement or higher income in later life is desired.
Case Study 2: IT Professional – £50,000 Salary
Pension Type: Workplace Pension (Defined Contribution)
Most private-sector employees are enrolled in defined contribution (DC) pensions, where the final retirement amount depends on how much is saved and how well the investments perform.
Contribution Structure:
- Minimum auto-enrolment: 5% employee + 3% employer = 8%
- Many employers offer higher matching: e.g. up to 10%
- At this income level, saving only the minimum is unlikely to result in a retirement pot that replaces 50–60% of pre-retirement income, often the benchmark for maintaining one’s lifestyle.
What’s Recommended?
For a 30-year-old IT professional aiming to retire at 65, a total contribution rate of 15% of salary is ideal. With a £50,000 salary, that’s £7,500 per year or £625 per month. If the employer matches up to 6%, the employee only needs to contribute 9%.
Recommended Action: Contribute 10-12% personally, especially if the employer offers a capped match. Increase contributions with each pay rise to avoid lifestyle inflation.
Also Read: https://wealthilyyours.com/vanguard-sampp-500-ucits-etf-accumulating-vuag/
Case Study 3: Business Owner – £60,000 Income
Pension Type: Self-Directed – Usually a SIPP
Business owners and the self-employed don’t have auto-enrolment or employer-matched pensions unless they set one up themselves. As a result, pension planning is entirely voluntary but critically important.
Unlike employees, business owners can use pensions to reduce corporation tax or income tax, as contributions are considered a business expense (if made from company profits). This gives a double benefit: building a retirement pot and reducing tax liability.
What’s Recommended?
Business owners should aim for at least 15-20% of their income, especially given they won’t benefit from employer contributions. For someone earning £60,000, this means contributing between £9,000 and £12,000 per year.
Tax Benefits:
- Contributions up to £60,000 per year (annual allowance) are tax-deductible.
- Investment growth within pensions is tax-free.
- 25% of your pension pot can be withdrawn tax-free from age 55 (rising to 57 in 2028).
Recommended Action: Use a SIPP or set up a director’s pension through the business. Automate monthly contributions and consider lump-sum top-ups at the end of each tax year.
Also Read: https://wealthilyyours.com/3-powerful-stock-picks-based-on-value-migration/
Summary: Pension Contribution Goals by Salary Class
| Role | Salary | Scheme Type | Target Contribution | Notes |
| NHS Nurse | £40,000 | NHS DB Pension | 9.3% (auto) + 3-5% | Scheme is generous, top-up optional |
| IT Professional | £50,000 | DC Workplace | 10-15% total | Combine employer match + personal |
| Business Owner | £60,000 | SIPP/DC | 15-20% | Full responsibility for pension building |
Final Thoughts
Understanding what percentage of salary should go to pension is essential, regardless of profession. While public-sector workers like NHS nurses have the advantage of defined benefit schemes, private-sector professionals and business owners must take a more active role in funding their retirement.
Whether it’s through employer contributions, salary sacrifice, or personal SIPPs, the key is starting early, contributing consistently, and reviewing your plan annually.
Planning your pension isn’t just about numbers, it’s about securing the freedom and lifestyle you want in later years. The right contribution today can make all the difference tomorrow.
Also Read: https://wealthilyyours.com/best-way-to-invest-10000-in-the-uk/
Conclusion: What Percentage of Salary Should Go to Pension?
Deciding what percentage of salary should go to pension isn’t just about following a rule of thumb, it’s about aligning your retirement goals with your lifestyle, income, and age. While the default workplace contribution may be a start, it’s crucial to re-evaluate what percentage of salary should go to pension as your earnings and responsibilities grow.
For NHS staff, IT professionals, or self-employed individuals, the optimal answer to what percentage of salary should go to pension varies, but it always plays a pivotal role in long-term financial health. Use this knowledge to assess what percentage of salary should go to pension based on your current situation and future goals.
Remember, starting early and contributing consistently is more impactful than waiting for the perfect moment. Ultimately, the most empowering thing you can do is answer the question what percentage of salary should go to pension with informed intent. Because knowing what percentage of salary should go to pension today helps you shape the retirement you deserve tomorrow.
Enjoyed the Post on "what percentage of salary should go to pension"? Share Your Thoughts and Spread the Word!
If you found this blog post informative and helpful, I’d love it if you could share it with your friends, family, or anyone who might benefit from it. Your support helps me reach more readers and continue creating content like this!
Also, I’d love to hear from you! What are your thoughts on the topic? Do you have any questions or insights to add? Drop a comment below - I’m here to chat and learn from your perspective too.
Thank you for being part of this journey, and I can’t wait to hear what you think!
