Retirement planning is about ensuring you have enough income to maintain your desired lifestyle when you stop working. With life expectancy in the UK continuing to rise — the Office for National Statistics estimates that a 65-year-old man can expect to live to around 84, and a woman to around 86 — your retirement could last 20 years or more. Planning early gives your money more time to grow.
The State Pension
The UK State Pension provides a foundation of retirement income, but it is unlikely to be sufficient on its own.
Key State Pension Facts
- Current State Pension Age
- 66 (rising to 67 between 2026 and 2028)
- Full New State Pension (2024/25)
- £221.20 per week (£11,502 per year)
- Qualifying Years Needed
- 35 years of National Insurance contributions
- Minimum Years for Any Pension
- 10 years
Source: GOV.UK — The new State Pension. The State Pension increases each year under the triple lock, rising by the highest of average earnings growth, CPI inflation, or 2.5%.
You can check your State Pension forecast and National Insurance record at GOV.UK. If you have gaps in your record, you may be able to make voluntary contributions to fill them.
Workplace Pensions and Auto-Enrolment
Since 2012, employers have been required to automatically enrol eligible workers into a workplace pension scheme. This is one of the most significant changes to UK retirement saving in decades.
Auto-Enrolment Minimum Contributions
| Contributor | Minimum |
|---|---|
| Employee | 5% (including tax relief) |
| Employer | 3% |
| Total | 8% |
Contributions are calculated on "qualifying earnings" between £6,240 and £50,270 per year (2024/25 figures). Source: The Pensions Regulator
While the minimum 8% total contribution is a good start, most experts agree it is unlikely to be enough for a comfortable retirement. The Pensions and Lifetime Savings Association (PLSA) publishes Retirement Living Standards that estimate the annual income needed for different lifestyles:
Minimum
£14,400
per year (single)
Moderate
£31,300
per year (single)
Comfortable
£43,100
per year (single)
Source: PLSA Retirement Living Standards (figures for 2024, outside London)
Pension Freedoms
Since April 2015, the pension freedoms introduced by the government give you much greater flexibility in how you access your defined contribution pension from age 55 (rising to 57 from 2028). Your main options are:
Leave it invested
Keep your pension pot invested and take money out when you need it.
Tax-free lump sum
Take up to 25% of your pot as a tax-free lump sum (up to a maximum of £268,275).
Flexi-access drawdown
Move your pot into drawdown and take income as needed, while the remainder stays invested. Income taken (beyond the tax-free element) is taxed as earnings.
Buy an annuity
Use some or all of your pot to buy a guaranteed income for life from an insurance company. Rates depend on your age, health, and interest rates.
Take it all as cash
Withdraw the entire pot (25% tax-free, rest taxed as income). For larger pots, this may push the individual into a higher tax bracket.
Source: GOV.UK — Options for using your pension pot and MoneyHelper
Tax Relief on Pension Contributions
One of the biggest advantages of saving into a pension is tax relief. The government effectively tops up your contributions:
| Tax Band | Rate | Cost of £100 Contribution |
|---|---|---|
| Basic rate (20%) | 20% relief | £80 |
| Higher rate (40%) | 40% relief | £60 |
| Additional rate (45%) | 45% relief | £55 |
The annual allowance for pension contributions is £60,000 for the 2024/25 tax year. Higher earners with income above £260,000 may have a reduced allowance (tapered down to a minimum of £10,000). Source: GOV.UK — Pension annual allowance
How Much Do You Need?
The amount you need depends on the retirement lifestyle you want and how long you expect to be retired. A common rule of thumb is to aim for an income of around two-thirds of your pre-retirement salary, though this varies widely by individual.
A financial adviser can help you model different scenarios, taking into account your State Pension entitlement, existing savings, expected investment returns, and inflation. They can also help you understand the trade-offs between taking income now and preserving your pot for later.
When to Seek Advice
Retirement planning is one of the most common reasons people seek financial advice. Common situations where people consult an adviser include:
- You are within 10 years of retirement and want to understand your options
- You have a defined benefit (final salary) pension and are considering transferring it — FCA rules require advice for transfers valued over £30,000
- You have multiple pension pots from different employers and want to consolidate
- You need to decide between drawdown and annuity (or a combination)
- You want to retire early and need to bridge the gap until your State Pension starts
You can also access free guidance from Pension Wise, a government-backed service for people aged 50 and over with defined contribution pensions.
Find a Retirement Planning Specialist
Search for FCA-authorised advisers who specialise in pensions and retirement planning near you.
Find Retirement AdvisersThis guide is for general information only and does not constitute financial advice. Tax rates, allowances, and thresholds are based on published HMRC and government figures and are subject to change. approval.co.uk is not authorised by the FCA and does not provide financial advice. Always seek professional advice before making decisions about your pension.