£750 a month into a pension: what you get after tax relief
What £750 a month becomes after tax relief
With relief at source, the pension scheme claims basic-rate tax back from HMRC. You pay £750, HMRC adds £187.50, and £937.50 is invested. That is the same as paying £937.50 gross and having 20% of it refunded straight into the pot.
£750 a month into a pension
| Your tax rate | Goes into pot | Basic-rate relief | Extra you can claim | Real cost to you |
|---|---|---|---|---|
| 20% taxpayer | £937.50 | £187.50 | £0.00 | £750.00 |
| 40% taxpayer | £937.50 | £187.50 | £187.50 | £562.50 |
| 45% taxpayer | £937.50 | £187.50 | £234.38 | £515.62 |
Extra relief for higher and additional rate taxpayers is claimed through Self Assessment or by asking HMRC to change your tax code.
How big could the pot get?
Paying in £937.50 a month including relief, a 5% a year return would give about £380,442 after 20 years and £764,415 after 30 years, before charges. Pension investments can fall as well as rise.
| Years of saving | Total paid in (with relief) | Pot at 5% a year |
|---|---|---|
| 10 years | £112,500 | £144,715 |
| 20 years | £225,000 | £380,442 |
| 30 years | £337,500 | £764,415 |
| 40 years | £450,000 | £1,389,867 |
What if your employer pays in too?
Most workplace schemes include an employer contribution on top of yours. It is effectively extra pay that goes straight into the pension, so check what your employer will match and take all of it.
£750 a month from you, plus employer money
| Employer adds | Total into pot a month | Pot after 30 years (5%) | Extra from employer |
|---|---|---|---|
| +£25 a month from your employer | £962.50 | £784,799 | +£20,384 |
| +£50 a month from your employer | £987.50 | £805,184 | +£40,769 |
| +£100 a month from your employer | £1,037.50 | £845,953 | +£81,538 |
The cost of waiting to start
Time is the biggest lever. The same £937.50 a month, if you start 5 or 10 years later, ends with a noticeably smaller pot, even though the monthly amount is identical.
£937.50 a month into the pot
| When you start | Pot at the end (5%) |
|---|---|
| Start now (30 years) | £764,415 |
| Wait 5 years (25 years) | £549,126 |
| Wait 10 years (20 years) | £380,442 |
Limits and rules to know
- The annual allowance for most people is £60,000, or 100% of your earnings if that is lower. It can be reduced for very high earners.
- Up to 25% of the pot can usually be taken tax-free, to a limit (the lump sum allowance) of £268,275 for most people. The rest is taxed as income.
- If your employer pays in, your own contribution is on top of theirs, so ask whether they will match more if you pay more.
- The earliest age you can normally take money from a pension is rising to 57 from April 2028 (currently 55).
Workplace pension or personal pension?
If you are in a workplace scheme, contributions usually come straight out of your pay, and in many schemes tax relief is given before you are paid (net pay) so you see the relief at once. A personal pension such as a SIPP uses relief at source. Both are worth having, but a workplace scheme with an employer contribution is usually the better first step.
Sources and further reading
Questions people ask
How much does £750 a month into a pension really cost?
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Results are estimates for information only, not financial advice. Read the full disclaimer.