When you join the Armed Forces you're automatically enrolled into the Armed Forces Pension Scheme.  You don't have to pay any money into it yourself.  You then get paid a pension when you reach the retirement age specified by the scheme - see Military pensions.

A pension is a tax-efficient way of saving so that when you reach retirement you have an income to live on. The information below is useful if you leave the Services and continue working or for your spouse or partner.




Why save into a pension?


A 21 year old needs to save about £200 a month to have a pension worth £15,000 a year.

Pensions might seem complicated but the basic idea is a simple one. It’s worth understanding their benefits, because your State Pension - whilst providing a foundation - may not be enough to live on on. You need to save more.

The importance of retirement savings

Millions of people aren’t saving nearly enough to give them the standard of living they hope for when they retire.

If you fall into this category, you have three choices really. You can:

  • Adjust downwards your expectations of what you’ll be able to afford in retirement
  • Start saving more
  • Retire later

Don’t rely on the State Pension to keep you going in retirement.


A 35 year old would need to save about £400 a month for the same £15,000 a year pension. This is why starting early is so important.

Even if you’re eligible for the full State Pension of £168.60 a week for the tax year 2019/20, this far below what most people say they hope to retire on.

The advantages of saving into a pension 

Once you’ve decided to start saving for retirement, you need to choose how you're going to do it. Pensions have a number of important advantages that will make your savings grow more rapidly than might otherwise be the case.

A pension is basically a long-term savings plan with tax relief. Your regular contributions are invested so that they grow throughout your career and then provide you with an income in retirement. Generally, you can access the money in your pension pot from age 55. 

How tax relief tops up your pension savings

Once your income is over a certain level, the government takes tax from your earnings. You can see this on your payslip. If you put money into a personal pension scheme, it qualifies for tax relief. This means that as well as the money you’re putting in, some of your money that would have gone to the government as tax now goes into your pension pot instead.

With personal or stakeholder pension schemes that you take out yourself, and with some types of workplace pension schemes, you can still get tax relief on your pension contributions, even if your income is too low to pay tax.

However, with other workplace pension schemes this doesn’t apply.

Top-ups from employers

To help people save more for their retirement, employers are now required to enrol their workers into a workplace pension scheme. This is called ‘automatic enrolment’.

If your work gives you access to a pension that your employer will pay into, then unless you really can’t afford to contribute or your priority is dealing with unmanageable debt, staying out is like turning down the offer of a pay rise.

Of course, if your employer will contribute to your pension regardless of whether you pay into it, then you should join the scheme whatever your financial circumstances.

Money fitness tip

You can pay into a pension for your spouse or partner if they don't have their own income.  And the tax man will top it up with tax relief - see  HMRC's website.

A tax-free lump sum when you retire

You can usually take up to a quarter of your pension savings as a tax-free lump sum. If you have built up your own pension pot in a defined contribution scheme (as opposed to a salary-related pension scheme) you can then use the rest of your pot as you choose once you reach the age of 55 - see Options for using your pension pot on the Money Advice Service's website. 

Stay MoneyFit

It’s sometimes difficult to imagine what your life may be like 40 or 50 years from now, but a bigger income when you retire will enable you to enjoy your retirement far more than if you are struggling to make ends meet on the State Pension. 

A pension is key to staying MoneyFit, so bear this in mind if you leave the Services and continue working.

Last reviewed: 09/04/2019

This content has been provided by the Money Advice Service