Pension on a £20,000 salary — small income, big compounding potential.

£20,000 is around the median wage for under-25s in the UK. At this salary you pay around £1,486 in income tax and £594 in NI per year, leaving roughly £17,920 take-home. The auto-enrolment minimum contribution puts about £1,100/year into your pension (5% personal + 3% employer on band earnings of £13,760). The single most consequential financial decision someone earning £20k can make in their 20s is increasing their pension contribution rate from the auto-enrolment minimum to 10%. The personal cost is around £350/year extra; the long-term benefit, compounded over 40 years at 5% growth, is roughly an additional £40,000 in their final pot. That's almost twice the original yearly salary, generated from a contribution most people genuinely won't notice in their monthly budget.