What does a pension contribution really cost?

Pension contributions made through your employer's scheme come off your gross salary before income tax is calculated (salary sacrifice or "net pay" arrangement). That means a contribution of £100 typically costs a basic-rate taxpayer around £68–80 in take-home, depending on the country and tax band.

The higher your marginal rate, the bigger the tax relief. In the UK, higher-rate taxpayers get 40% relief; in Ireland, up to 40%; in the US, tax-deferred 401(k) contributions reduce your federal taxable income.