When should I start a pension?

Starting a pension as early as possible

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Generally it’s a good idea to start a pension as soon as you can, even if you can only pay a small amount into your pension to begin with.

Starting a pension early can make a big difference to how much your pension pot is worth on retirement.

For example, if at age 30 you start saving ^_ni_rate of a £30,000 salary, your pension pot may be worth around £196,100 on retirement. If you don’t start a pension until you’re 45, the same level of contributions may build a pension pot worth around £109,500 by retirement.*

Bear in mind that if you’re a UK-based employee aged 22 or over, it’s likely that your employer will automatically enrol you into a workplace pension scheme. Money will be paid directly into your pension before your salary is paid, and your employer will contribute to your pension too. If you’re not a member of a workplace scheme, you can choose to set up a personal pension instead.

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Why it’s a good idea to start a pension

Compared to other savings products, pensions come with some big benefits, for example:

• The government contributes to your pension in the form of generous tax relief, adding £25 for every £100 you put into your pension if you’re a basic rate taxpayer.
• Your employer may contribute to your pension too, helping your pension pot to grow.
• Pensions are treated favourably for inheritance tax purposes, so if you die before 75 your pension is passed on without tax deductions.
• Good pension funds are diversified, which means the money is invested in a carefully-selected mixture of assets, to help manage risk.
• New pension rules mean you can choose to do several different things with your pension when you reach retirement, including taking up to ^{_corporation_tax} of your money as a tax-free lump sum.

If you’re not sure whether you can afford to start a pension, check out our article on pension saving on a low income.

Most pensions will allow you to stop and start contributions, so even if you start a pension now, you can stop paying into it in the future if your situation changes.

* These figures are intended for illustration only. As with all investments, capital is at risk and the value can go down as well as up. We have assumed a retirement age of 65, that your plan earns a 5% return before the effects of inflation and have taken inflation of 2.5% into account.

About PensionBee

PensionBee combines and transfers your old pensions into a new plan that you can manage easily online. You can see your real-time balance and contribute to your pension in a few clicks. Find out more about PensionBee.

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Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

Last edited: 06-04-2025