What if we had more savings? What if we had more time, more enjoyment, and more time to do what we want? There might be the difference between making ends meet and enjoying a comfortable retirement with more money in your pension fund. And it’s not as difficult as you would believe to increase the amount of your pension fund.
1. Reconsider your work’s pension scheme
Those over the age of 22 who earn more than £10,000 per year are automatically enrolled in a workplace pension plan. Your pension will receive a value equivalent to 8% of your salary each year from your contributions, tax relief, and employer contributions. You might lose thousands of pounds if you decide to leave your company’s pension plan. Moreover, doing so might have a significant negative impact on your retirement savings. Also remember that although the minimum contribution is established, both you and your employer may contribute more, which might significantly increase your pension.
2. Claim your maximum tax relief
With a pension, you get tax advantages that you otherwise wouldn’t have had. Depending on the rules of your pension plan, your employer or your pension provider may seek back tax relief from the government on your behalf. Higher and additional rate taxpayers may be required to reclaim the additional 20% or 25% tax relief from HMRC via self-assessment if they are eligible. For the sake of your retirement funds, be sure you’re taking advantage of all the tax breaks you’re entitled to.
3. Keep an eye on your pension’s fees as well as performance
If you’re contributing to a pension on a regular basis, that’s fantastic! Is it a good reason to let your pension run out? Not at all. It’s possible that your pension is being eaten away by exorbitant fees and poor performance. Also, if you don’t periodically monitor your pension, you won’t know if anything like this has occurred. Seventy-one percent of those with pensions in defined contribution plans have no idea how much they’re spending in fees. However, if you can reduce your pension’s yearly fee by only 1% a year now, you could have an extra £27,000 in your retirement fund. In the same way, a 2% annual increase in your pension’s performance might result in an additional £54,000 in your retirement fund when the time comes. There are licenced financial advisers who can review your pension for you to make sure it’s in working order and advise you whether you would be better off in a different plan, check out Portafina.
4. Carry over your annual allowance
Your ‘pension annual allowance’ is the maximum amount you may contribute to your pension each year, which presently stands at £40,000. This sum comprises both your personal contributions and those of your employer. You may be taxed if you exceed your yearly allowance. As long as you haven’t spent all of your current annual limit, you have the option to carry over your annual allotment from up to three prior years.
5. Track down your forgotten pension pots
You may have more money saved up than you believe. If you’ve worked for a variety of companies, you may be eligible for numerous pension plans. Although you no longer contribute to them, the funds you accumulated before leaving the company are yours to keep. In the event that a pension is lost, there is the risk that it may not be functioning as well as it might and that it may also be losing value.
6. Get an approved financial advisor
In fact, people who seek guidance on their pensions might end up with an extra £27,000 compared to those who don’t. We all know that saving for retirement may be difficult, and that’s why it’s important to entrust your financial destiny to a professional that is trained and regulated in this field.
7. Check your eligibility for the full State Pension
A pleasant retirement won’t come from relying only on the State Pension. Benefits are only available when 35 years of National Insurance payments have been made. It’s not necessary that they take place throughout the course of successive years. The amount of State Pension you get will be affected if you have any gaps in your payments, which are called “gaps.”
8. Don’t stop paying in
Even if you’re saving for your own retirement, you may want to consider increasing your fund. It’s entirely up to you how much you want to contribute on a regular basis. In the event that you come across any extra cash, you might just pay a one-time fee. By increasing your monthly payments by £50, you may have an additional £23,000 in your retirement fund when you need it the most.