Pension power moves: how to raise your retirement savings rate

When people think about growing their pension, they often focus on investment performance. That matters, but there is another lever that is usually more within your control: your retirement savings rate.

Your pension savings rate is the percentage of your income being paid into your pension. It can include your own contributions, your employer’s contributions, and any extra personal pension payments you make.

For many people, the biggest opportunity is not a dramatic one-off change. It is a series of small, deliberate “power moves” that gradually increase how much goes into their pension without putting unnecessary pressure on day-to-day life.

This matters because auto-enrolment is a starting point, not a personalised retirement plan. UK private-sector defined contribution saving levels have remained broadly unchanged since the last automatic enrolment minimum contribution increase in 2019, and around 3 in 10 private-sector defined contribution employees are saving at automatic enrolment minimum levels (GOV.UK).

If you want to improve your retirement prospects, here are some practical ways to raise your pension savings rate.

What is a pension savings rate?

Your pension savings rate is the percentage of your income that is being saved into your pension.

For example, if you earn £50,000 and pay 5% into your workplace pension while your employer pays 3%, your total pension savings rate is 8%.

That total figure matters. Looking only at your own contribution can understate what is really going into your retirement pot, while ignoring your employer contribution can make it harder to judge whether you are on track.

In the UK, the automatic enrolment minimum total contribution is 8% of qualifying earnings, including at least 3% from the employer (GOV.UK). However, “minimum” does not mean “ideal”. Your own target should depend on your age, earnings, existing pension savings, retirement goals, and how long your money has to grow.

Power Move One: stop treating auto-enrolment as the target

Automatic enrolment has helped millions of people start saving into a pension, but it was designed as a default system, not as a bespoke retirement plan.

The first step is to check what you are actually paying in. Many people know they are “in the pension”, but they do not know whether their contributions are based on full salary or qualifying earnings.

Ask your employer or pension provider:

1. What percentage of salary am I contributing?
2. What percentage is my employer contributing?
3. Are contributions based on full salary or qualifying earnings?
4. Does my employer offer matching above the minimum?
5. Can I increase my contribution online or through payroll?

This simple review can reveal whether you are saving at the minimum, whether you are missing out on extra employer contributions, or whether you can afford to increase your rate gradually.

Best practice: Review your pension contribution rate at least once a year, ideally around the start of the tax year, your annual pay review, or your work anniversary.

Power Move Two: increase contributions when your pay rises

One of the least painful ways to increase pension contributions is to do it when your income rises.

If you receive a pay rise and immediately increase spending, the extra money can disappear into everyday life. If you increase your pension contribution before your lifestyle adjusts, you may barely notice the difference.

Hargreaves Lansdown suggests increasing pension contributions whenever you receive a pay rise and checking whether your employer will increase their contribution when you increase yours (Hargreaves Lansdown).

A simple rule is:

• Each time your pay rises, put part of the increase into your pension before you get used to spending it.

You might choose to increase your pension contribution by 1% each year, or commit to putting a fixed proportion of every pay rise into your pension. The right number depends on affordability, but the habit is powerful.

Best practice: Create a “pay rise rule” in advance. For example, you could decide that half of every future pay rise goes towards today’s lifestyle and half goes towards your future self.

Power Move Three: capture the full employer match

Employer matching can be one of the most valuable pension benefits available, but it is easy to overlook.

Some employers will contribute more to your pension if you increase your own contribution. For example, an employer might pay 3% by default but increase this to 5%, 7%, or more if you contribute at a higher level.

If you are not taking full advantage of that match, you may be missing out on part of your overall remuneration. It is not “free money” in a technical sense, but it is a workplace benefit that can significantly improve your total pension savings rate.

Ask your employer:

1. What is the maximum employer pension contribution available
2. What do I need to contribute to receive it?
3. Does the employer match apply automatically?
4. Are there any waiting periods, salary bands, or scheme rules I should know about?

Best practice: Before saving extra elsewhere for long-term retirement goals, check whether you are receiving the maximum employer pension contribution available through your workplace scheme.

Power Move Four: use salary sacrifice where available

Salary sacrifice can be another effective way to improve pension saving.

With pension salary sacrifice, you agree to give up part of your gross salary, and your employer pays that amount into your pension as an employer contribution. Because your salary is reduced for National Insurance purposes, this can create National Insurance savings.

Legal & General explains that salary sacrifice can either increase take-home pay through lower National Insurance or, through SMART salary sacrifice, redirect National Insurance savings into the pension while keeping take-home pay the same (Legal & General).

Not every employer offers salary sacrifice, and it is not suitable for everyone. It can affect things linked to salary, such as borrowing calculations, certain benefits, or minimum wage rules. Salary sacrifice cannot reduce pay below the National Minimum Wage (Legal & General).

There is also an important change on the horizon. From April 2029, salary sacrifice pension contributions above £2,000 a year are expected to be subject to National Insurance, although the current full National Insurance saving remains available until then (PensionBee).

Best practice: If your employer offers salary sacrifice, ask whether it operates as a take-home pay boost or a pension contribution boost, and whether any employer National Insurance saving is shared with employees.

Power Move Five: understand pension tax relief

Pension tax relief can make contributions more powerful than they first appear.

For many basic-rate taxpayers, personal pension contributions receive a 25% government top-up, meaning a £100 personal contribution becomes £125 in the pension (PensionBee).

Higher-rate and additional-rate taxpayers may be able to claim further tax relief, depending on how their pension scheme is set up. Some workplace schemes apply relief through payroll, while others require higher or additional-rate taxpayers to claim extra relief through Self Assessment (Hargreaves Lansdown).

This is why it is important to know what type of pension contribution arrangement you have. The three common approaches are:

1. Salary sacrifice: You give up salary in exchange for an employer pension contribution.
2. Net pay: Contributions are taken before income tax is calculated.
3. Relief at source: Contributions are taken after tax, and basic-rate relief is added to the pension.

Best practice: If you are a higher or additional-rate taxpayer, check whether you are receiving all the pension tax relief you are entitled to. If you are unsure, ask your pension provider, payroll team, accountant, or financial adviser.

Power Move Six: use carry forward for bigger contributions

If you receive a bonus, sell a business, inherit money, or have a year of unusually high income, pension carry forward may allow you to make a larger pension contribution.

The standard UK annual allowance is currently £60,000 for most people, and it applies across all of your private pensions rather than separately to each pension (GOV.UK).

Carry forward may allow you to use unused annual allowance from the previous three tax years, provided you use the current tax year’s allowance first and meet the relevant rules (GOV.UK).

There are important caveats. Aviva notes that you must have been a member of a UK-registered pension scheme in the years you want to carry forward, you need enough relevant earnings in the current tax year to support personal contributions, and carry forward cannot be used to increase the Money Purchase Annual Allowance if that has been triggered (Aviva).

Carry forward can be useful, but it is an area where mistakes can be costly. This is especially true for high earners, people affected by the tapered annual allowance, and anyone who has already accessed pension benefits flexibly.

Best practice: Treat carry forward as a planning exercise, not a last-minute guess. Keep contribution records, check all pension inputs, and seek advice before making a large payment.

Power Move Seven: automate future increases

Good intentions are easy to forget. Automation helps turn a one-off decision into a long-term habit.

You can do this informally by setting a yearly reminder to increase your pension contribution. Some workplace schemes may also allow automatic contribution increases.

The behavioural logic is simple: if you decide once, in advance, you do not need to keep persuading yourself every year.

Research from the Center for Retirement Research at Boston College found that automatic enrolment can increase savings rates, although the long-term impact may be reduced by factors such as job turnover, vesting, and cashing out small pots (Center for Retirement Research at Boston College). While Vanguard’s 2025 workplace retirement research found that 45% of participants increased their deferral rates in 2024, showing that contribution-rate increases are a normal and measurable part of retirement saving behaviour.

Best practice: Set an annual pension increase date. A 1% increase each year may feel small, but repeated over time it can materially change your retirement savings rate.

Power Move Eight: review old pensions and lost pots

Raising your savings rate is about future contributions, but it also helps to know what you already have.

Many people have pension pots from previous employers. Some are forgotten, some are invested in default funds that may no longer suit the saver, and some carry charges or benefits that are worth reviewing.

The government offers a Pension Tracing Service to help people find contact details for workplace or personal pension schemes (GOV.UK).

Before transferring or consolidating pensions, check whether any old pension includes valuable guarantees, protected tax-free cash, exit penalties, or other features. Defined benefit pensions require particular care, and regulated advice is usually required before transferring larger defined benefit rights.

Best practice: Create a one-page pension inventory listing each provider, current value, contribution status, charges, investment choice, and any special benefits.

A simple 10-minute pension savings rate review

Use this checklist to get started:

1. Find your current employee pension contribution percentage.
2. Find your current employer pension contribution percentage.
3. Check whether contributions are based on full salary or qualifying earnings.
4. Ask whether your employer offers contribution matching above the minimum.
5. Check whether salary sacrifice is available.
6. Review whether you can increase contributions by 1%.
7. Set a reminder to review contributions after your next pay rise.
8. Check whether you have old pensions from previous jobs.
9. Confirm whether you are receiving all relevant tax relief.
10. Speak to a financial adviser before making large contributions or using carry forward.

Example: how small increases can build momentum

Imagine someone earning £50,000 who currently contributes 5% of salary while their employer contributes 3%. Their total pension savings rate is 8%.

If they increase their own contribution to 6%, their total pension savings rate becomes 9%, assuming the employer contribution remains unchanged.

If their employer also increases its contribution when they increase theirs, the total savings rate could rise further.

The key lesson is that you do not have to solve retirement planning in one step. A structured series of small increases can make pension saving feel more manageable.

FAQs

What is a good pension savings rate?
A good pension savings rate depends on your age, earnings, retirement goals, existing pension savings, investment returns, employer contributions, and planned retirement age. Automatic enrolment minimums should be treated as a starting point rather than a personalised target.

Should I increase my pension contributions by 1%?
For many people, a 1% increase can be a practical first step. It is small enough to be manageable but meaningful when repeated over time, especially if increases are linked to pay rises.

Is salary sacrifice still worth it?
Salary sacrifice can still be valuable where available because it may reduce National Insurance and increase pension contributions or take-home pay. However, from April 2029, salary sacrifice pension contributions above £2,000 a year are expected to be subject to National Insurance (PensionBee).

What is pension carry forward?
Pension carry forward allows some people to use unused annual allowance from the previous three tax years, provided they meet the rules and use the current year’s allowance first (GOV.UK).

Can I put a bonus into my pension?
In many cases, yes. A bonus can be paid into a pension, but the tax treatment depends on your scheme, income, annual allowance, and whether salary sacrifice is available. Large bonus contributions should be checked carefully, especially for high earners.