You’ve opened the annual pension statement, looked at the projected income and done the sum in your head. It’s not a disaster. It just isn’t the retirement you had in mind, the one with the decent car and the second holiday.
The good news is that if you’re 50 or 55, you probably have ten years or more before you stop work. That’s long enough to make a real difference, as long as you use the tax system rather than fight it. Here’s how an extra £100,000 by 65 can be done, and how to make the pot last once you have it.
How much do I need to save to add £100,000 to my pension?
Less than you’d fear, because the taxman chips in. Pay £520 a month from your bank account into a personal pension such as a SIPP and your provider claims basic-rate relief from HMRC, so £650 a month goes in.
Do that for ten years and you’ve paid in £78,000 gross. If it grows by 5% a year after charges, you’d end up with roughly £100,000. That growth rate is an illustration, not a promise. Markets don’t do straight lines.
For a higher-rate taxpayer it gets better. You can claim back another 20% (£130 a month here) through your Self Assessment tax return. So the real cost is about £390 a month, or £46,800 over the decade, for a pot of around £100,000. In Scotland the bands and rates are different, including a 21% intermediate rate and a 42% higher rate, but the relief still follows your marginal rate, and the extra above the basic 20% is claimed the same way.
If you have a workplace scheme, check first whether your employer will match higher contributions. That’s free money, and you shouldn’t leave it on the table.
The cheapest pound you will ever invest is the one the taxman tops up and your employer matches.
Can I pay more than £60,000 into my pension in one year?
Possibly. The annual allowance has been £60,000 since the 2023/24 tax year, limited to 100% of your earnings if that’s lower. Carry forward lets you use allowance you didn’t use in the previous three tax years, as long as you were in a registered pension scheme in those years.
That matters for anyone with a bonus, an inheritance or money from downsizing. A lump sum paid in at higher-rate relief can do in one go what monthly saving takes years to do.
There are two traps. Very high earners can have their allowance tapered down to as little as £10,000. And once you’ve taken taxable money out of a defined contribution pension beyond the tax-free cash, the money purchase annual allowance cuts your limit to £10,000 a year. Taking a small amount early ‘just because you can’ could badly limit your saving later.
Usually both. A pension gives you tax relief going in, and normally 25% tax-free coming out, capped at £268,275 for most people. The rest is taxed as income. You can’t touch it until 55, and that rises to 57 from 6 April 2028.
An ISA gives you no relief going in, but everything that comes out is tax-free and you can get at it whenever you like. The allowance is £20,000 a tax year. From 6 April 2027, under-65s will only be able to put £12,000 of that into cash ISAs. The rest has to go into stocks and shares.
There’s a newer factor too. From April 2027 most unused pension funds are due to count towards your estate for inheritance tax. For some families that makes the old plan, spending the ISA first and leaving the pension untouched, look less clever. If your estate is near the thresholds, this is worth a proper conversation with an adviser.
One more change on the horizon. From April 2029, salary sacrifice pension contributions above £2,000 a year will no longer be free of National Insurance. Until then, sacrifice is still a very efficient way to save if your employer offers it.
The quiet £90,000 you might be losing to fees
Charges look tiny as percentages and huge in pounds. Take a £300,000 pot left invested for 20 years. At 5% growth with 1% a year in total charges, it grows to about £657,000. Cut the charges to 0.3% and it’s nearer £750,000. That gap of roughly £90,000 comes from the fees alone.
Look up the platform fee, the fund charges and any adviser fee. Then dig out the old workplace pensions you’ve forgotten about. The government’s free Pension Tracing Service can help you find lost ones. Consolidating can cut costs, but check for valuable guarantees or exit penalties before you move anything. Some older schemes have benefits worth far more than a lower fee.
How do I make my pension last through retirement?
Start with the State Pension, because it’s the only income you have that rises with inflation and lasts for life. The full new State Pension is over £11,000 a year. Get a forecast on GOV.UK. If you have gaps in your National Insurance record, filling a year with voluntary contributions often costs under £1,000 and can add around 1/35th of the full amount for life. That’s one of the best returns going.
Then plan your withdrawals. Take too much in the first few years, especially during a market fall, and you lock in losses the pot may never recover from. Many people keep a year or two of spending in cash so they aren’t forced to sell shares at the bottom.
Take the tax-free cash in stages rather than all at once, and be ready for the first taxable withdrawal to be taxed on an emergency basis. You can reclaim it, but it’s a nuisance.
Finally, use the free help. Pension Wise, through MoneyHelper, offers a free guidance appointment if you’re 50 or over and have a defined contribution pension. For bigger decisions, such as buying an annuity, using drawdown or transferring a final salary scheme, see an FCA-regulated financial adviser.
In short
Adding £100,000 to your pension by 65 is realistic if you start ten years out. Paying about £520 a month into a pension, topped up to £650 by basic-rate relief, could get you there at 5% annual growth, and higher-rate relief cuts the real cost to under £47,000. Use carry forward and employer matching, keep fees low and check your State Pension record. Then draw the money down carefully, and get free guidance from Pension Wise before you take it.
Sources
Midcent Money
Andrew Ingram writes about money for men 45 and over – the years when retirement starts to feel real and the decisions get bigger. Pensions and retirement planning, investing, savings, mortgages and tax: what changed, what it means for your plans and what's worth doing about it. No hype, nothing to sell, and a clear steer on when it pays to get personal advice.
One of Midcent's writers. Spotted something? Write to andrew@midcent.uk.
