Fretting over future finances? Panic not: these must-read tips can power-up your pension

Leaving work may be a long way off – or just around the corner – but it’s never too late to give your pension a push. Research carried out by the Retirement Living Standards found the minimum needed to cover a basic lifestyle in retirement is around £14,400 per year for one person – or £22,400 for a couple. And if you want a more comfy existence, you’ll need to increase this to £43,100 per year for one person and £59,000 for two. Lacking pension pizzazz? Here’s 10 tips to make sure your pension’s working perfectly for when you retire.

1. Set your P-plan

“Start by thinking about what you want from retirement,” says Commercial Director Liz Hunter at MoneyExpert. “If you’re married or living with someone, this should be done together. Think about the type of retirement you want, amount you think you need, target retirement ages and any known future costs”. And consider talking to a pro. “Sitting down with a financial advisor will make sure you cover everything. Discuss your aims and options, and come up with a plan that satisfies you.”

2. Trace lost pensions 

If you’ve had numerous jobs over the years, you may have a pension that’s long been forgotten. “£31.1 billion is lost in pensions across the UK, so it’s worth double-checking you haven’t mislaid cash using the government’s free Pension Tracing Service,” says Liz. “It searches a database of more than 200,000 workplace and personal pension schemes to find the information you need.”

3. Track AWOL accounts

Similarly, locating a lost current or savings account can boost your bank balance. Search platform Gretal estimates there’s currently £4.5 billion sitting in unclaimed accounts in the UK, so now’s the time to reunite with your reddies.  “If you’ve lost your details, use the My Lost Account service to help find info,” suggests Liz. Surprisingly, bank accounts can be marked dormant in as little as a year if no transactions have been made – so losing touch with your cash is easier than you think.

4. Consolidate to accumulate

Fingers in too many pies? “If you have multiple pension pots that aren’t performing, consider consolidating to make things easier to track and manage,” says Liz. “This will reduce fees – you’ll only have one set of fees to pay with one provider – and you may get a better return if you transfer them all to a higher-performing scheme”.    

5. Maximise employer contributions

Many employers offer pension schemes that match any pension contributions you make (up to a certain limit), so this is an easy way to grab free funds. “Take full advantage by contributing the maximum amount your employer will match, as it effectively doubles your pension contributions at no extra cost,” explains Liz.  Even an extra 1% from your employer can boost your pension by hundreds – if not thousands – of pounds each year.

6. Mind the gap

Plugging gaps in National Insurance payments could also boost your state pension. “To receive the full State Pension, you need 35 years of qualifying National Insurance (NI) contributions, so check your NI record using the State Pension Forecast Tool for missing years,” says Liz.  “It’s also possible to save into your partner’s personal pension to help them avoid gaps when they aren’t working or receiving a reduced income, like maternity leave or going part time. The tax relief on these contributions is based on your spouse’s tax rate and earnings.” 

7. Add more when you can

Another way to pull up your pension is to increase private contributions you make. “If you’re not part of an employer pension scheme, or have an extra personal pension pot, you could boost this by reviewing and increasing your contributions whenever possible,” suggests Liz. Had a pay rise? Opt to add these extra pounds directly to your pension before they get swallowed up by day-to-day spends.

8. Diversify investments 

For low risk future payouts, try not to put all your eggs in one basket. “A diverse investment portfolio can help balance risk and reward, crucial for long-term pension growth,” says Liz. “Consider spreading your investments across various asset classes to boost your pot, which might include stocks, bonds and property.” Unsure where? Again, speaking to a financial advisor’s worth every penny.

9. Utilise tax relief

“Pension contributions receive tax relief; so maximise this by contributing up to the annual allowance, currently £60,000, if you can,” explains Liz. “There are reduced allowances for high earners with an adjusted income over £260,000, or if pension money is accessed, when the allowance drops to £10,000. Additionally, utilise unused allowances from the previous three years, potentially allowing much larger contributions, provided you already have a pension in place.”

10. Delay pay day

Finally, if you want to work for longer – go ahead! Putting off retirement increases income and employer contributions – and brings with it the social and mental benefits you get from working. “Delaying retirement beyond state pension age could boost it by up to 5.8% per year, resulting in higher payments,” explains Liz. “For instance, with the current full rate of the new State Pension at £230.25 a week, deferring for one year would provide an extra £13.35 a week.” That’s almost £700 extra a year – or maybe a package holiday in the sun. Sounds good to us.