It is a question that comes up often in our conversations with clients. You hit your mid-forties, life has been busy, and your pension has not been the priority it perhaps should have been. Now you are looking at the gap between where you are and where you want to be in retirement, and it feels daunting.
The answer is that starting at 45 is not too late. But it does require a clear plan, greater focus, and, in some cases, a willingness to make trade-offs. Here is what you can realistically achieve.
You still have 20-plus years
If you plan to retire at 67 or later, you have more than two decades of contributions and investment growth ahead of you. Compound growth works in your favour even when you start later than ideal, and consistent contributions over 20 years can build a substantial pot.
Make the most of tax relief
One of the most powerful things about a pension is the tax relief on contributions. For a basic rate taxpayer, every £80 you put in is topped up to £100 by HMRC. For a higher-rate taxpayer, that £100 contribution can effectively cost you just £60 once you claim the additional relief through your tax return.
At 45, you are likely to be at or near your peak earning years. This makes pension contributions particularly tax-efficient, and it is often a good time to be paying more in rather than less.
How much should you be contributing?
There is no universal number, but a rough rule of thumb is to take your age, halve it, and aim for that percentage of your earnings going into your pension each month. At 45, that points towards around 22 to 23 percent of your salary. That may not be achievable immediately, but it gives you a target to work toward.
Annual allowance and carry forward
The standard annual allowance for pension contributions is £60,000 per year (or 100% of your earnings, whichever is lower). If you have unused allowance from the previous three tax years, you may be able to carry that forward and make larger contributions now. This can be a useful catch-up tool for those starting later.
Employer contributions
If you are employed, make sure you are taking full advantage of your employer’s pension matching. If your employer matches contributions up to 5% but you are only putting in 3%, you are leaving money on the table. Our pension advice team can help you work out what you might be missing.
| Key pension numbers – 2026/27 tax year | Amount |
|---|---|
| Standard annual allowance | £60,000 per year (or 100% of earnings if lower) |
| Money purchase annual allowance | £10,000 (triggered once taxable drawdown income is taken) |
| Carry forward | Unused allowance from the previous 3 tax years may be carried forward |
| Tax-free lump sum | Up to 25% of your pot (subject to lump sum allowance of £268,275) |
| Minimum pension age | 55 (rising to 57 in April 2028) |
| Basic rate tax relief | £80 contribution topped up to £100 by HMRC |
| Higher rate tax relief | £60 effective cost for a £100 contribution (via tax return) |
| State Pension (full, 2026/27) | Approximately £12,547.60 per year |
Should you focus on your pension or pay off your mortgage?
This is one of the most common dilemmas for people in their forties. The short answer is that it depends on the interest rate on your mortgage and whether you are a higher-rate taxpayer.
If you are paying a relatively low mortgage rate and you are a higher-rate taxpayer, pension contributions are often a better use of spare income because of the tax relief. If your mortgage rate is high or you are a basic rate taxpayer, paying it down faster may make more sense. In many cases, a mix of both is the right approach.
What if you have had previous pensions?
Many people in their forties have pension pots from previous employers sitting dormant. Tracking these down and understanding their value is an important first step. You can use the government’s pension tracing service to locate lost pots.
Once you know what you have, it is worth considering whether consolidating pensions into a single plan makes sense for you. There are pros and cons, and the right answer depends on whether any of your existing schemes have valuable guaranteed benefits. Our pension advisers can help you assess this.
Do not overlook the State Pension
For 2025/26, the full new state pension is worth around £11,500 per year. If you have gaps in your National Insurance record, it may be worth paying voluntary contributions to fill them. This can provide a significant guaranteed income in retirement at relatively low cost.
Frequently asked questions
Is it too late to start a pension at 45?
No. Starting at 45 gives you more than 20 years of contributions and investment growth if you plan to retire at 67 or later. The key is to start as soon as possible and contribute as much as your budget allows to take full advantage of tax relief and employer matching.
How much should I put into my pension at 45?
A common rule of thumb is half your age as a percentage of your salary each month – so around 22 to 23% at 45. This may not be immediately achievable, but it gives you a target. Even increasing contributions by 2 to 3% now, then stepping them up over time, can make a significant difference over 20 years.
What is carry forward, and can I use it?
Carry forward allows you to use unused annual pension allowances from the previous three tax years. This can enable you to make larger one-off contributions now if you have the means. There are specific eligibility rules, so it is worth checking with an adviser before relying on this.
Should I pay off my mortgage or pay into my pension?
For most higher-rate taxpayers, pension contributions offer better value than overpaying a mortgage because of the tax relief. For basic rate taxpayers with a high mortgage rate, paying down the mortgage may be more effective. In practice, a mix of both is often the right answer, and the balance depends on your specific numbers.
Get independent pension advice from Beaumont Wealth
Starting a pension in your forties isn’t too late with the right plan. Our independent, Chartered advisers will look at your full picture – your existing pots, earnings, goals, and your timeline – and help you build a retirement income strategy that is realistic and right for you.
Book your free initial appointment or call us to speak with an adviser today.
Important information
This article is intended for information purposes only and does not constitute personal financial advice. The information is based on our understanding of current legislation and HMRC guidance as at April 2026, which may change. Tax treatment depends on individual circumstances and is subject to change. Beaumont Wealth is authorised and regulated by the Financial Conduct Authority. The value of investments can fall as well as rise, and you may get back less than you invest. Past performance is not a guide to future returns.
