Millions of Brits simply aren’t saving enough to live comfortably in retirement, but there are ways you can boost your pension pot. Here are some tips:
1. Increase your pension contributions
- The obvious way to boost your pension is to pay more money in. The earlier you start paying into a pension, the more time your money has to grow.
2. Make the most of tax relief (especially if you’re a high earner)
- Basic-rate taxpayers get tax relief of 20%, so for every £80 they pay in, the government will top this up by £20. This brings the total pension contribution to £100.
- Higher rate taxpayers get tax relief of 40%, meaning every £60 they put in, the government tops this up by £40.
- And additional rate taxpayers get 45% relief, meaning every £55 they put in the government will give them £45.
3. Use salary sacrifice
- Your employer may offer you the chance to make pension contributions through a salary-sacrifice scheme.
- This is where you give up part of your pay and in return your company puts the sum “sacrificed” into your pension along with its own contribution to the scheme.
- The benefit of this arrangement is that it lowers your overall gross salary. This in turn reduces the amount you pay in income tax and national insurance.
4. Consolidate your pensions
- If you have worked for different employers, it is likely you will have amassed a number of different pension pots.
- Merging these into one scheme would save you the hassle of trying to monitor the performance of a number of pensions. It could also reduce the fees you pay and widen your investment choices if you switch to a superior scheme.
5. Find lost pensions
- With many of us changing jobs throughout our working lives, it is easy to lose track of the various schemes we have paid into.
6. Switch your investments
- Most schemes allow you to check online where your money is invested and how your investments are performing in delivering decent returns.
- If you are paying into a pension through your employer, you are likely to be paying into the standard default fund.
- Default funds are designed for the needs of the average scheme member not the individual and you don’t choose the assets, sectors or countries where your money is invested.
7. Add money from windfalls
- If you come into an inheritance or are gifted money, it could be worth transferring some of this to your pension if you can afford it. Tax relief means the money will be given an instant boost of at least 20%.
8. Defer your pension
- Did you know you can push back the date when you are entitled to receive the state pension?
- This may sound counter-intuitive, but there is a logical reason for doing so. A deferred state pension means you’ll get more when you come to receive the benefit.
9. Make sure you haven’t been underpaid
