3rd June 2016 at 2:30pm
We all know how essential it is to have a good pension, right?
After all, we’ll all need money to live on when we retire. But, more than that, we want to have enough so we can freely enjoy it without having to worry about money.
So here’s some good news: you can boost your pension pot by getting someone else to pay into it. Here’s how…
Get the taxman to give you money
To increase your pension, obviously you have to put more money into it. But the best part is: when you increase your pension contributions, you normally get an immediate boost in the form of tax relief. So,
every time you top up your pension, the taxman does too.
For example, pay £80 in, and the taxman pays £20 and if you’re a higher rate taxpayer it could be even more. Do that, say, every month for five years, and the taxman will have given you £1,200. Pay a bit more, or do it for a bit longer and the numbers get even bigger.
Here’s how to calculate your gift from the taxman
But don’t just take our word for it. Take a look at our new pension booster tool. It’ll show you how a small increase in your contributions could make a real difference to your pension. You’ll be able to see the tax benefits and investment returns you could get. If you’ve got a pension with us simply:
- login to try the pension booster tool and see how much difference a small increase could make; or
- if you don’t have a login, you can register easily online.
Not all pensions are the same so you could receive your tax benefits in a different way. If the only pension you have with us is a workplace pension, you won’t have access to the tool just yet but it’s coming soon so watch the space.
Other ways to give your pension a shot in the arm
It’s always good to give your pension a helping hand when you can. Here are three other simple ways to do it:
- Add lump sums to your pension pot. Ideal if you receive an inheritance or unexpected windfall, adding lump sums quickly boosts your retirement income. You’ll usually get tax relief and – depending on how long you keep your money invested for – the opportunity to grow it
- Bring your pensions together. If you’ve collected several pension plans over the years, bring them together where you can see them. It’s easier to keep track of your overall savings; plus you’ll get a good idea of your income at retirement. But remember, bringing your pensions together into one plan isn’t right for everyone so make sure you do your homework first
- Postpone your retirement. You can choose when you retire – there’s no specific age when you must. Delaying retirement gives you more time to put into your pot, and more time for this pot to grow.
We’d love to know what you think of the pension booster. How do you plan to boost your pension?
Laws and tax rules may change in the future. The information here is based on our understanding in June 2016. Your personal circumstances also have an impact on tax treatment. As with any investment, its value can go up or down and may be worth less than what was paid in.