Blog » 8 top tips for increasing retirement savings

8 top tips for increasing retirement savings

March 26, 2019
The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article.

Wouldn’t it be nice to have more? More time, more fun, and to do more of the things we want? When it comes to your retirement having more in your pension pot could be the difference between just getting by and living life comfortably. And with a tweak here and there, increasing your pension pot size is easier than you might think.

8 top tips for increasing your retirement savings

1. Think twice before you opt-out of your workplace pension scheme

If you are aged 22 and over and earn more than £10,000 a year, you will be automatically enrolled into a workplace pension scheme. Between your own contributions, tax relief, and money added by your employer, your pension will be receiving a value equal to 8% of your salary each year. Opting out of your workplace pension scheme could cost you thousands of pounds. And doing so could leave you considerably worse off in retirement. And don’t forget, while a minimum contribution is set, both you and your employer could add more than this, which could considerably boost your pension.

2. Review your pension’s performance

If you’re regularly making contributions into a pension, that’s great! Does that mean you should leave your pension to tick over? Certainly not. The truth is, high charges and poor performance could be eating away at your pension. And if you don’t review your pension regularly you will be none the wiser that this could be happening. A staggering 71% of pension holders in defined contribution schemes do not know what charges they are paying1. A regulated financial adviser, like Pension Access, can check your pension for you to make sure everything is tip top and we can let you know whether you could be better off in another scheme.

3. Check you are entitled to the full State Pension

While the State Pension alone is unlikely to provide you with a comfortable retirement, you should check to see that you are entitled to receive the full amount. You need to have paid 35 years of National Insurance contributions to qualify for the full amount. These don’t need to be consecutive years. However, if you’re missing any years in your contributions, known as gaps, this will affect the amount of State Pension you receive. Find out more about the State Pension here

4. Find your lost pension pots

It’s possible that you may have more in savings than you think. If you have had multiple jobs in your career, then you may have many workplace pension schemes. Even though you are not contributing to them now, the savings you made before you left the job are rightfully yours. There’s a possibility that a lost pension might not be performing as well as it could and if it also has high charges attached, it could be losing value.

5. Ensure you are claiming the full tax relief you are allowed

One of the huge benefits of a pension is tax relief. For basic rate tax-payers, tax relief is claimed back from the government either by your employer or your pension provider, depending on the terms of your scheme. If you are a higher rate tax payer, you may need to claim tax relief back from HMRC yourself, through self-assessment2. This is essentially free money, so it’s worth making sure you are receiving your full tax relief to help boost your retirement savings.

Smiling couple | Tips for increasing retirement savings

6. Pay in a little bit more, whenever you can

Whether you are saving into a personal pension or workplace pension scheme, you could decide to give your fund boost. You have the option to make regular additional contributions that are comfortable for you. Or, you could make a one-off payment if you happen to come into some money.

7. Carry your annual allowance over

The maximum that you can pay into your pension each tax year is called your ‘pension annual allowance’ and is currently set at £60,000. This amount includes your own and your employer’s contributions. If you go over your annual allowance you could incur a tax charge. To avoid any charges, you do have the option to carry over your annual allowance3 from up to three previous years, but only once all your current annual allowance has been used up.

8. Seek regulated financial advice

Did you know that those who seek pensions advice could have over £30,0004 more in their pot than those who don’t? We know pensions are complicated, and not particularly fun, and that’s even more reason to let someone who is qualified and regulated, like Pension Access, make sure your future is shaping up nicely.

1Financial Conduct Authority Data Bulletin, March 2018
2Gov.uk Tax on your private pension
3Gov.uk Can you carry over your annual allowance?
4The Value of Financial Advice – a research report from ILC-UK – November 2019

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