Retirement

Pensions explained: workplace, SIPP and State Pension

Quidsmith Guides · Updated 2026-07-03 · 8 min read

Game context, not financial advice. This article explains how things work inside Quidsmith, a personal-finance simulation game. The numbers are illustrative and the model is simplified for play. It is not personal financial advice. For decisions about your own money, speak to a regulated adviser.

Pensions are the most powerful long-term tool in Quidsmith, and also the most misunderstood. There are really three of them, they work differently, and used together they do most of the work of funding a 40-year retirement.

The three pots

Pot	Where it comes from	Access
Workplace pension	Auto-enrolment: 5% of you, plus a 3% employer match	From 57
SIPP	Your own top-ups, with tax relief	From 57
State Pension	The government, ~£11,500 a year, inflation-linked	From 68

The employer match is free money

While you are working, auto-enrolment puts 5% of your gross salary into your workplace pension and your employer adds another 3% on top. That match is an instant, guaranteed uplift you get nowhere else in the game. Turning it down is like refusing a pay rise.

Illustrative: for every £100 you give up from take-home pay, tax relief and the employer match mean noticeably more than that actually lands in the pension and starts compounding.

Tax relief on top

Pension contributions come with tax relief at your marginal rate. For a higher-rate taxpayer, £1,000 in the pension can cost as little as £600 of take-home. The combined SIPP and workplace allowance is £60,000 a year, which is far more than most players will use, so the practical limit is usually your income, not the cap.

Steady contributions plus the match plus tax-free growth, compounding across a working life. The last decade adds the most, because it is compounding on the largest balance.

The catch: the lock

The trade for all that free money is access. Pension pots are untouchable until 57, and they cannot be raided for an unexpected event. When you do draw, 25% comes out tax-free and the rest is taxed as income, though usually at a lower rate than the relief you got going in.

A sensible order

Contribute enough to grab the full employer match first, always. Then balance pension top-ups against your ISA: money you might need before 57 belongs in the ISA, money you are sure is for later life works harder in the pension. Because your salary stops at 60 and the State Pension only starts at 68, the pots you build now are what bridge the gap and fund the decades beyond.