What does a pension increase really cost you?

The maths most people never see

The single most common reason people under-save into their workplace pension is that the cost feels bigger than it is. If you're a basic-rate taxpayer and you put an extra £100 a month into your pension through a net pay arrangement, your take-home pay doesn't fall by £100 — it falls by £80, because that £100 would have been taxed at 20%. For a higher-rate taxpayer the same £100 costs just £60.

Seen the other way round: your money is instantly worth 25% more (or 66% more at higher rate) the moment it lands in your pension, before any investment growth. There are very few places you can get that return on day one.

Why we built this into payroll itself

This calculator is the public version of a feature every PayAdjust employee gets in their payslip portal: a live slider that models pension changes against their real salary and tax code, so they can see the true cost before deciding — and apply the change themselves, before payday. Employers using PayAdjust consistently see employees choose higher contribution rates once they can see this maths for their own numbers.

Assumes a net pay arrangement and the standard tax code — an estimate, not financial advice. Pension money is usually locked away until at least age 55 (rising to 57).