5 Easy Ways To Help Boost Your Pension
Pensions, who needs them? Well the truth is - most of us, hence why the government kindly provides a state pension, but outside of that you ideally need one of your own. It’s estimated that up 20% of people over 55 in the UK have no private pension whatsoever, despite around 45% of us wanting to have at least £20,000 per year to retire on.
When you’ve got bills and other financial commitments on your plate, finding enough money for your pension isn’t going to be top of your priorities. When you do finally get a few minutes to look into things you feel overwhelmed by it all, retirement seems so far away and all of this can be done another day.
Time flies as we all know, so the sooner you start looking into pensions the better, here are 5 tips we found that might help get the ball rolling for you…
If you have a defined contribution pension, here are six simple things you can try:
1. Use pay rises as an excuse to save
It’s a simple tip to help you save more, start off by paying in whatever you can afford, then whenever you get a pay rise, redirect a portion of it into your pension. The idea is that you barely ever feel the increased contributions inline with your pay increase but you’ll also still benefit from some of that hard-earned extra money.
2. Pay in more when a regular spend ends
You can try a similar move to the one above whenever a regular expenditure comes to an end. For example, you’ve just paid off a car loan that was £200 per month, now pay that £200 into your pension instead and it’s far less likely you’ll feel the difference because you’re already used to that money coming out each month.
3. Maximise any employer contributions
Some generous employers match whatever you put into your pension pot (upto a certain amount), so find out what the limit is because you’re essentially doubling your contribution and getting an even bigger amount back further down the road.
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4. Lump in a lump sum
If you find yourself in a position at the end of the year with left over money from inheritance or a bonus at work then consider paying this lump sum straight into your pension pot, the Government even contribute!
Let’s say you had inherited £1,000 and decided to put it straight into your pension, the Government would kindly add in £250 in tax relief if you’re a basic rate payer, and if you’re a higher or even additional rate payer you can potentially claim back even more, but it’s worth seeking professional advice to find out your exact position.
5. Be Picky about your investments
Where your hard-earned pension is invested can have a big impact on what you’ll get back once you retire. For example, if your pension scheme has a 'default' investment option (where your money is automatically invested when you join the scheme) it might not be the most suitable for you. So it’s always worth looking into what investment fund(s) your money is in.
