I’m 22 and want to start my first pension how much should I start to invest each month?

17 February 2022

Question by Ellen

I’m 22 and want to start my first pension how much should I start to invest each month?

Answered by Boring Money

Hi Ellen,

Great to hear you are thinking about starting to save for the future. There are a few points to consider here.

If you are already employed, it’s highly likely that you will be enrolled in your employer’s workplace pension. If you decide that a pension is a good place to start saving additional money, it’s worthwhile asking your employer if they will match any increases to your personal contributions within your workplace pension.

When deciding how much to save (for any purpose) it often comes down to finding a balance. Not putting away too much that you are struggling to make ends meet, but also remembering that saving any amount, no matter how small, will make a positive difference in the future. Not only will you receive tax relief on any personal contribution into a pension, you can also benefit from potential capital growth within the pension (assuming it is invested), and as you are still young the compounding effect over many years can make very small, regular payments result in a potentially significant pot in the future.

There are however limits to how much you can save into a pension each year or the ‘annual allowance’ for its proper name. This can be a little complex, but generally speaking the maximum you can save into a pension each year and still receive tax relief is the lower of £40,000 or 100% of your relevant earnings (e.g. salary/from employment). If you don’t have any earnings, the maximum you can contribute and still benefit from tax relief is £2,880 net per annum (£3,600 gross).

Finally, it’s also important to think about your short/medium/long term objectives. It’s likely that you won’t be able to access your pension funds, under any circumstances, until at least age 57 so keep that in mind when you are thinking about how much money to put away each month.

I hope this answer helps, I would recommend you seek advice from a qualified financial planner to help you decide what’s best for you and your situation. Please don’t hesitate to contact me if you’d like to discuss things further.

Kind Regards,


Answered by

Boring Money