UK Pension Guide — Workplace, SIPP & State Pension Explained

Types of UK Pension

Workplace Pension

Your employer must auto-enrol you into a workplace pension if you earn over £10,000. Minimum contributions: you pay 5%, employer pays 3% (8% total). Contributions are tax-free — you get tax relief at your marginal rate.

SIPP (Self-Invested Personal Pension)

A pension you control yourself. Choose your own investments (funds, shares, ETFs). Same tax relief as workplace pensions. Annual allowance: £60,000 (or 100% of earnings, whichever is lower).

State Pension

Currently £221.20/week (2025/26). You need 35 qualifying years of National Insurance contributions for the full amount. Check your forecast at gov.uk/check-state-pension.

Tax Relief

Pension contributions get tax relief at your marginal rate. Basic rate (20%) is added automatically. Higher (40%) and additional (45%) rate relief must be claimed via self-assessment.

The 60% Tax Trap

Between £100K-£125,140, your Personal Allowance is withdrawn — creating an effective 60% marginal rate. Pension contributions can bring your taxable income below £100K, reclaiming the full allowance. This is one of the most effective tax planning strategies available.

Calculate your pension tax relief with our Pension Tax Relief Calculator.