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Eight steps to boost your retirement savings

Written by: Jamie Smith-Thompson
It's never too late to make a difference to the life you will lead in retirement. Every penny paid into your pension will have a beneficial impact on the amount of money you will have to live on when you retire.

Below are eight top tips to help you boost your retirement savings:

1) Think twice before you opt out of your employer’s pension

Most of the time, with a workplace pension you pay a minimum contribution – plus your employer pays a percentage too – which is effectively free money. Be sure to always keep on top of your contributions and increase them when you can afford to. Usually, your employer or the scheme provider will help with managing your contributions and in some cases, match those contribution increases. This is called “contribution matching”.

2) Cut pension fees by consolidating or transferring

Always keep a close eye on the fees you are charged by your pension provider. Rates can vary massively and what seems like a small change could make a big difference. For example, reducing your annual provider fees by just 1% could mean £25,000 more in your pot over 20 years.

Plus, if you have numerous pensions you will probably be paying a fee for each. To reduce charges, check out other pensions on the market with lower fees or consider consolidating your savings into one pot, or switching your pension.

3) Check out your state pension

The state pension is going to underpin your total retirement savings so you need to know whether you are going to get the full rate or not. You can check online at If it looks like you will get less than the full amount, usually because of gaps in your National Insurance payments, you can make voluntary contributions to bring your state pension allowance back up to the full rate.

4) Trace past pension funds

If you have had multiple jobs in your career then you might have multiple pension schemes. And even though you are probably not contributing to these schemes right now, the savings you made before you left the job are rightfully yours. The sooner you track your pension, the sooner you can make sure these savings are working as hard as they possibly can for you.

5) Make the most of your tax relief

The government gives tax relief on all pension contributions based on your income tax rate. If you are a basic rate tax payer (20%) then your employer or pension provider will make sure that tax relief is applied to all contributions that you make to your pot. If you are a higher or additional rate tax payer, you will probably need to claim back the extra 20 or 25% yourself via HMRC’s self-assessment process.

6) Increase your contributions

Frequently review your pension payments against your own personal budget so that you increase your contributions when you can afford to do so. Small increases now could make a big difference to your future plans. And the longer you can contribute for, the better.

Don’t forget, you can also defer accessing your state pension and most private pensions. If your budget and circumstances allow you to do this, those added years of saving could make a big difference to how you live your life when you retire.

7) Carry over your annual allowance

The maximum you can pay into your pension each tax year is called your ‘pension annual allowance’ and is currently set at £40,000. This allowance includes: your personal contributions; any other contributions (for example, from your employer), and any tax relief. If you are in a strong position and can add more than £40,000 to your pension in a tax year, then contributions above this maximum allowance will be taxed at your marginal rate.

If you don’t use all this allowance in one year you can carry over the remaining balance and use it to boost your allowance limit the next year. However, you can only carry over unused allowance from the previous three tax years.

8) Seek regulated financial advice

If you have a pension, the next step is to make sure it is running as it should be. Overlooking the things a pension specialist could correct, such as high charges and low performance, could mean a nasty shock when it’s time to start drawing an income from your pot.

That’s why it makes sense to seek regulated financial advice and check your pension. For example, a recent report by the ILC showed that people who take financial advice for their pension are £27,000 better off, on average, than those who don’t.

Jamie Smith-Thompson is managing director at pension advice specialist Portafina

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