Question 1

What is auto-enrolment and what are the minimum contributions?

Accepted Answer

Auto-enrolment requires employers to enrol eligible workers into a workplace pension. Minimum contributions: 5% employee (including 1% tax relief) + 3% employer = 8% total of qualifying earnings. Many employers offer more.

Question 2

How much of my pension pot can I take tax-free?

Accepted Answer

You can take 25% of your pension pot as a tax-free lump sum when you access it (from age 55, rising to 57 from 2028). The remaining 75% is subject to income tax when withdrawn.

Question 3

What is a good pension pot for retirement in the UK?

Accepted Answer

The PLSA (Pensions and Lifetime Savings Association) estimates £37,000/year for a comfortable retirement. With 4% withdrawal rate, this requires a pot of ~£925,000. State Pension provides additional income (~£11,500/year in 2024).

Question 4

What is the annual pension allowance?

Accepted Answer

The annual allowance for pension contributions eligible for tax relief is £60,000 (2024/25 onward, up from £40,000). There is also a carry-forward rule that lets you use unused allowance from the past 3 tax years.

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