Can somebody tell me how a pension works?

All the links below are good basic guides.

Basically you put money aside, which is invested on your behalf. When you come to retire all those contributions will have vuilt up and increased in value, from interest, ppty value or share increases. However much money you have is called a pension pot. At retirement you cna take a tax free lump sum, then either draw a small amount each year or buy an annuity, which is a kind of product which pays you an income from retirement until you die.
The other thing to add is that if you join an occupational scheme run by your employer, then they will normally make a free contribution i.e 5% of your salary.

If you cna afford one then its a good idea if you cna put enough money aside. It is long term though so you wont be able to touch any money till 55 or even much later.

https://www.unbiased.co.uk/news/a-beginners-guide-to-pensions/1459
https://www.moneyadviceservice.org.uk/en/articles/pension-information-guide-to-the-basic-facts
http://www.moneysavingexpert.com/savings/discount-pensions

Thank you for a clear and concise answer, it really helped.
I will look more into the links but generally now I know more about it. Thanks

Yw. Occupational ones tend to be better or more generous.
Do read those links eventually as they are cut down versions.
Its hard when you are young to think about 40-50 years down the line.
Just dont forget if you put it in the pension now you wont see it again for many years, but the earlier you save the more time it has to grow.

If you can keep it up and you have an employer contributing 5% as well, then it can be a valuable investment.

£10 now is going to be worth £100 when you retire.

I'd be careful about your last statement since that is not necessarily true. It could be worth more or less depending on how the money is invested by your pension provider and what else happens in the world/economy over the next 40-50 years.