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How a £21 pension top-up could boost your pot by £26,000
40% of new graduates are prioritising savings over their retirement
Paying 1% more into your pension could leave you £26,000 better off in retirement. That’s according to pension provider Standard Life, which analysed how small increases can make a big difference for recent graduates starting work.
For someone earning £25,000, that 1% increase works out at £250 a year (or around £21 a month) – roughly what you might spend on a takeaway or a round of drinks at the pub.
Put in 2% more, and your total retirement fund could grow by more than £50,000.
Here, Which? explains how much you could build up, why even small increases matter and how to make the most of your pension now.
How much more could you save?
Standard Life surveyed 2,000 recent graduates and found that while 89% say pensions matter to them, only 18% count retirement saving as a top priority right now.
That’s not surprising. Many said they’re focused on general savings (40%), investing (35%) or covering day-to-day living costs. And 28% are putting money towards a house deposit.
But the earlier you start contributing more, the more you could benefit from investment growth over time.
For example, if you start saving into a workplace pension at 22 with a salary of £25,000 and pay the minimum 5% (while your employer pays 3%), you could build up a pension pot worth around £210,000 by the time you retire at 68.
Increase your contributions from 5% to 6% – an extra £21 a month – and your pot could grow to £236,000. And if you pay in 8% (roughly £167 a month), your pot could grow to £289,000.
The table shows how much your total pension pot could grow by age 68 if you increase your contributions from 5% to between 6% and 8%, assuming that your employer contributes 3% throughout.
| Your pension at 68* | 5% contribution from you | 6% contribution from you | 7% contribution from you | 8% contribution from you |
|---|---|---|---|---|
| Estimated pension pot | £210,000 | £236,000 | £262,000 | £289,000 |
| Extra saved | £26,000 | £52,000 | £79,000 |
*Assuming 3.50% salary growth per year, and 5% a year investment growth. Figures account for 2% inflation. Annual Management Charge of 0.75% assumed. The figures are an illustration and are not guaranteed. Earning limits aren't applied. Source: Standard Life.
- Find out more: how much will I need to retire?
How to increase your pension contributions
To increase your regular pension contributions, speak to your employer and it will update your payroll for you. If your employer offers matching contributions, these should update automatically, too.
You can also make one-off payments into your pension. Most providers allow you to do this through their website, although it’s worth checking the process first. Your employer should have provided your pension provider’s details when your workplace scheme was set up.
There’s a limit to how much you can pay into your pension each year without triggering a tax charge. This is called the annual allowance. For the 2025/26 tax year, the limit is £60,000 across all your pension pots.
- Find out more: how the pensions annual allowance works.
4 ways to grow your pension pot
Workplace pensions are a great way to save as both you and your employer contribute, meaning more is put away. Here are a few ways you can help your workplace pension pot go even further:
1. Stay enrolled
Once you’re earning at least £10,000 a year and are aged 22 or over, you’ll be automatically enrolled into a workplace pension. It might be tempting to opt out to focus on short-term spending, but doing so means losing your employer’s contributions, which is essentially free money.
You’ll also miss out on pension tax relief. This means for every £80 you contribute, the government adds £20 – boosting your savings without any extra effort.
The earlier you start, the more time your money has to grow through investment returns and the better prepared you’ll be for retirement.
- Find out more: calculate pension tax relief.
2. Ask if your employer will contribute more
Employers are required to pay in at least 3% of your salary, but many offer more generous contributions, especially if you increase yours, too.
Some employers might even match your contributions up to a certain limit. There's no cap on how much your employer can contribute.
Before changing your pension contributions, make sure you’ll keep enough of your wages to cover your costs, including money for unexpected expenses.
3. Check where your money's invested
Unless you actively choose a fund, your contributions will usually be placed into your pension provider’s default fund. These are designed to suit most people, but they won’t be right for everyone.
Your investment choices should reflect how long you have until retirement and how much risk you’re comfortable taking. If you’re in your 20s or 30s, you might feel comfortable taking more risks now to aim for higher growth over the long term.
Log in to your pension provider’s website to see where your money is currently invested and what alternatives are available.
- Find out more: do you know where your pension is invested?
4. Increase contributions when you get a pay rise
Whenever you get a pay rise or a bonus, you should consider increasing your regular monthly payments or paying some extra in lump sums.
Even small, regular increases, if you're able to do so, or a one-time lump sum payment can significantly increase your total pension pot over time.
- Find out more: how long does my pension need to last?
