Pension contribution calculator UK 2026/27
£2,000.00 a year goes into your pension, plus £1,200.00 from your employer. It costs you £1,440.00 of take-home pay, because you save £400.00 in income tax and £160.00 in National Insurance: every £1 in your pension costs you 72p.
Your take-home pay goes from £2,693.30 to £2,573.30 a month.
The three ways to pay, at £40,000 and 5%
| Method | Into your pension | Tax saved | NI saved | Costs you |
|---|---|---|---|---|
| Salary sacrifice | £2,000.00 | £400.00 | £160.00 | £1,440.00 |
| Net pay (taken before tax) | £2,000.00 | £400.00 | £0.00 | £1,600.00 |
| Relief at source (provider adds 20%) | £2,000.00 | £400.00 added by the provider | £0.00 | £1,600.00 |
Your payslip with and without the pension
| Line | Without | With |
|---|---|---|
| Salary | £40,000.00 | £40,000.00 |
| Pension | £0.00 | −£2,000.00 |
| Income tax | −£5,486.00 | −£5,086.00 |
| National Insurance | −£2,194.40 | −£2,034.40 |
| Take-home pay | £32,319.60 | £30,879.60 |
A month: £2,693.30 → £2,573.30.
Quick answers
What does a 5% pension contribution really cost?
£1,440 a year on a £40,000 salary with salary sacrifice, or £120 a month, for £2,000 in your pension. Through net pay or relief at source it costs £1,600, because you keep paying National Insurance on the full salary.
What is the minimum I have to pay?
Under auto-enrolment at least 8% of your qualifying earnings (the part between £6,240 and £50,270) goes in, with your employer paying at least 3% of that. On £40,000 that is 8% of £33,760: £2,700.80 a year, of which your employer pays £1,012.80.
Does this show what my pension will be worth when I retire?
No. It shows what goes in this year and what it costs you now. How it grows depends on investment returns, which nobody can promise; your provider's statement shows a projection.
Sources: GOV.UK, tax on your private pension contributions; HMRC rates and thresholds for employers 2026 to 2027 (checked 31 Oct 2026); DWP, automatic enrolment earnings trigger and qualifying earnings band 2026/27 (checked 1 Nov 2026).