UK Pension Types Explained
State Pension, workplace, SIPP — what they are and how they fit together.
State Pension
£11,973/year (2025/26) if you have 35 qualifying NI years. Paid from State Pension age (currently 66, rising to 67 by 2028). It's a foundation, not a retirement plan.
Workplace Pension (Auto-Enrolment)
If you earn over £10k/year, your employer must enrol you. Minimum contributions: 5% from you, 3% from employer. Many employers match more — always take the match.
Defined Contribution (DC)
Your contributions go into a pot invested in funds. Final value depends on contributions and growth. The default for most modern workplaces.
Defined Benefit (DB) / Final Salary
Promises a guaranteed income for life based on salary and years of service. Mostly only available in the public sector and a few legacy private schemes. If you have one, hold onto it.
SIPP (Self-Invested Personal Pension)
A DIY pension wrapper you set up yourself. See our SIPP guide for details.
Salary Sacrifice — the secret weapon
Instead of contributing from post-tax salary, you “sacrifice” gross salary in exchange for pension contributions. You save income tax and National Insurance — and many employers pass on their NI saving too. For higher-rate taxpayers, salary sacrifice can effectively turn £100 of salary into £143+ in your pension.
