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Boost your pension savings with extra contributions from your employer. An effective way to help build your long term financial security.
What is pension contribution matching?
Pension contribution matching is a benefit many employers offer, where they increase the amount they contribute to your pension, when you increase your own, up to a maximum amount.
Matching works differently depending on the employer, and most schemes will cap the maximum amount they’ll match. Some employers match contributions like for like and others may offer tiered increases. Your employer can tell you if they offer this, and if so, how your matching structure works.
Our research shows that only 37% of employees currently take advantage of pension contribution matching1. Discover how it works in practice.
How pension contribution matching can work in practice
To give you an idea of how pension contribution matching can boost your pension savings, here’s an example based on someone earning £30,000 a year. Contributions start at 4% from the employee (this includes tax relief from the government) and 4% from the employer. As contributions increase, so does the combined total going into the pension - up to a capped level of 7% employee and 7% employer.
| Employee contribution (each year)* |
Employer contribution (each year) |
Total yearly contribution |
| 4% (£1,200) | 4% (£1,200) | £2,400 |
| 5% (£1,500) | 5% (£1,500) | £3,000 |
| 6% (£1,800) | 6% (£1,800) | £3,600 |
| 7% (£2,100) | 7% (£2,100) | £4,200 |
| 8% (£2,400) | 8% (£2,400) | £4,500 |
*This amount includes tax relief top up from the government. The actual amount deducted from your monthly pay will be less than this.
If the employee pays more than the matching limit of 7%, as shown in the example above, their employer’s contribution stays at the capped level.
By gradually increasing your own contributions and making the most of pension contribution matching, you can boost your pension savings over time, taking full advantage of this valuable workplace benefit.
Does my employer have to match my pension contributions?
Your employer doesn’t need to offer pension contribution matching, but they must pay at least 3% of your earnings into your workplace pension if you meet the automatic enrolment criteria. You must also contribute at least 5%, part of which is tax relief from the government. To qualify, you need to:
- Be aged between 22 and State Pension age
- Earn at least £10,000 a year and work in the UK.
This ensures you receive a basic level of support towards your pension savings, even if matching isn’t available.
What are the benefits of pension contribution matching?
Pension contribution matching can help you:
- Boost your pension savings over time: Higher total contributions give your pension more potential for long-term investment growth - although values can go down as well as up.
- Take advantage of additional contributions from your employer: Matching means your employer is adding more to your pension when you do. It’s a valuable part of your overall reward package.
- Benefit from tax efficient saving: Your pension contributions benefit from tax relief which is then added to your pension. The amount depends on individual circumstances and could change in future.
- Build positive savings habits: Small increases, especially when supported by employer matching, can encourage positive long-term saving behaviour.
Things to keep in mind
Reviewing your contribution levels each year could help you stay on track to achieve your retirement goals. This is especially important if your income changes or if there are adjustments to your contribution structure. Regular reviews can help ensure that your pension savings are working as hard as possible for your future.
You may want to consider your budget before increasing your contributions, as pension savings can’t be accessed until retirement age. Reviewing your financial situation can help you make informed decisions about how much to contribute without impacting your current lifestyle.
The amount you get back at retirement depends on how much you pay in, the charges on your plan and how well the funds you invest in perform. Investment returns are never guaranteed, so while the value of your investments could grow, it can also go down. This means you could get back less than you put in.
Make the most of matching
Only 37% of employees are currently taking advantage of pension contribution matching1. Many people aren’t aware that matching could be available to them or know how it works - which means they could be missing out on additional contributions.
Next steps
- Check your current contribution levels.
- Ask your employer if they offer pension contribution matching.
- If so, review your employer’s pension contribution matching structure and what’s on offer.
- If you aren’t maximising the amount your employer offers, consider increasing your contributions.
- You can do this gradually if you prefer, often 0.5% or 1% at a time. Allowing you to start small and build.
If you’re unsure what’s right for you, you may want to talk to your employer or a financial adviser.