MAXIMISING
PENSION SAVINGS
Get back to dreaming about your retirement.
Not dreading it.
G U I D E T O
SEPTEMBER 2022
However, even in the current
climate there are ways to maximise
the value of any pension savings
you do have.
Free money from your employer
When offered the opportunity to join a
workplace pension, it’s nearly always a good
idea to do so. For most people, your employer
must automatically enrol you in a workplace
pension scheme, and you may even be offered
a pension plan if you don’t meet the criteria.
Workplace pension schemes are made
up of your own payments (5% or more of
earnings) which are deducted from your
salary, often before you pay tax, making
it easier to save, and your employer’s
contribution, which at the very least must be
equivalent to 3% of your earnings.
Many employers offer more than this or
match any extra payments you make so it’s
worth checking if you’re getting the most out
of this valuable benefit.
Extra money from the
government
Anyone who decides against investing in a
workplace or personal pension also turns
down help from the government. That’s
G U I D E T O
MAXIMISING PENSION SAVINGS
Get back to dreaming about your retirement. Not dreading it.
Welcome to our Guide to Maximising Pension Savings. Many people are feeling the
pressure on their !nances at the moment due to the backdrop of rising in"ation
and the cost-of-living soaring. In these circumstances, it can be di#cult to think about
your long-term !nances or even contemplate saving for the future.
because in order to encourage people to save
for retirement, the government provides a
top-up called ‘tax relief ’ to pension payments.
How you receive tax relief depends on the
type of plan you have and the rate of income
tax you pay. But as an example, if you’re a
basic rate taxpayer saving into a personal
pension in the current tax year, you get 20%
tax relief on your payments. So, if you pay
£200 a month into your pension plan, the
£40 of tax relief you receive on that payment
means it will only cost you £160. Higher rate
or additional rate taxpayers could claim back
even more.
Some workplace pension schemes offer
tax relief in a different way, such as through
salary sacrifice or exchange schemes, so
check with your employer if you’re not sure
how this works for you. And in Scotland, the
tax relief details differ slightly. But in all these
cases, the general point is the same: each time
you defer paying into a pension plan, you
miss out on an extra boost.
The State Pension will
not cover everything
Another common mistake is to assume that
the State Pension will meet your retirement
needs. However, it’s important to know that
02
GUIDE TO MAXIMISING PENSION SAVINGS
the State Pension won’t be available until
your late 60s, and may not cover all of your
outgoings.
Currently, the new flat-rate State Pension
is £185.15 a week, or just over £9,600 a year.
At the same time, the Pensions and Lifetime
Savings Association (PLSA) calculates that a
single person needs £10,900 a year for just a
‘minimum’ standard of living in retirement.
This rises to £20,800 a year for a ‘moderate’
lifestyle, which includes a car and some help
with maintenance and decorating each year.
Keep a track of all
your pension plans
If you have moved jobs or home a few times,
and not informed your pension provider,
then one of these ‘lost’ pension pots could be
yours. It’s worth spending time tracking down
any potential missing pots to help boost your
future finances.
The minimum contribution is
unlikely to be enough
Auto-enrolment has boosted the pension
savings of millions of people but the 8%
minimum payment may not get you the
retirement lifestyle you want. It’s important,
therefore, to have a retirement lifestyle in
03
GUIDE TO MAXIMISING PENSION SAVINGS
mind – the PLSA calculations can be helpful
here as they can give you a real figure to
aim for, and you can then work out what’s
feasible and put the necessary steps in place
to help you achieve your goals.
Review your pension plan regularly
You might not want to talk about your
pension plan every day, but dismissing
pensions as boring is a mistake, and one
that becomes increasingly serious over
time. While this might be difficult at the
moment, steps such as topping up your
payments, especially in your 20s, 30s or
early 40s, can make a large difference,
thanks to the snowball effect
of compounding.
Understanding your workplace or
private pension, making sure you know
how to get more ‘free’ payments from your
employer or the government, or using it
to pay less tax (such as through bonus
sacrifice) could make a major difference to
your long-term finances.
Understand where your
pot is invested
A related mistake is not knowing where
your pension pot is invested, whether that
matches your life-stage and priorities or
how to choose the right investment options.
For example, if your retirement is still some
years ahead, you could potentially afford to
take a little more risk. Conversely, you may
want to dial down the risk as you get nearer
to retirement. n
A PENSION IS A LONG-TERM
INVESTMENT NOT NORMALLY
ACCESSIBLE UNTIL AGE 55 (57 FROM
APRIL 2028 UNLESS PLAN HAS A
PROTECTED PENSION AGE).
THE VALUE OF YOUR INVESTMENTS
(AND ANY INCOME FROM THEM)
CAN GO DOWN AS WELL AS UP
WHICH WOULD HAVE AN IMPACT
ON THE LEVEL OF PENSION BENEFITS
AVAILABLE.
YOUR PENSION INCOME COULD
ALSO BE AFFECTED BY THE INTEREST
RATES AT THE TIME YOU TAKE YOUR
BENEFITS.
TAX TREATMENT VARIES ACCORDING
TO INDIVIDUAL CIRCUMSTANCES AND
IS SUBJECT TO CHANGE.
NEED A HAND WITH YOUR
RETIREMENT PLANS?
$e details surrounding pension rules
are complex. Careful !nancial planning
combined with our expert knowledge
can help you manage your a%airs as
tax-e#ciently as possible. To ensure
you have enough money to have the
retirement you want, please contact us.
“ANYONE WHO DECIDES AGAINST
INVESTING IN A WORKPLACE OR
PERSONAL PENSION ALSO TURNS
DOWN HELP FROM THE GOVERNMENT.
THAT’S BECAUSE IN ORDER TO
ENCOURAGE PEOPLE TO SAVE FOR
RETIREMENT, THE GOVERNMENT
PROVIDES A TOP-UP CALLED ‘TAX
RELIEF’ TO PENSION PAYMENTS.”
Published by Goldmine Media Limited, Basepoint Business & Innovation Centre, 110 Butterfield Green Road, Luton, LU2 8DL.
Content copyright protected by Goldmine Media Limited 2022. Unauthorised duplication or distribution is strictly forbidden.
This guide is for your general information and use only, and is not intended to address your particular requirements. The content should not be
relied upon in its entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and
timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate
in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough
examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of the
content. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. Levels and bases of, and reliefs from, taxation
are subject to change and their value depends on the individual circumstances of the investor. The value of your investments can go down as
well as up and you may get back less than you invested. All figures relate to the 2022/23 tax year, unless otherwise stated.
Making the right choices now could make a big difference
to how much money you have in the future and saving for
retirement could help you achieve your desired lifestyle.
To discuss your plans for the future and how
we can help, please contact us.
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TO MAXIMISE YOUR
PENSION SAVINGS?