Five Top Pension Tips to Boost Your Savings
Pension plans are said to be the best way to start saving for your retirement. It is always worth reevaluating your pension plan so that you can make the most of your savings and ensure that your money will go further in your retirement.
This article will outline the top pension tips that will help to boost your savings ahead of your retirement so that your time spent not working is as stress-free as possible.
Top Up Your Pension Payments Over Time
Some months are going to cost you more than others, with birthdays and holiday expenses for example. However, it is likely that you might hold off spending for a few quieter months, meaning that there is a gap in your monthly budget. This is a good time to increase your pension payments, even by a small amount each month. This could also include making some one-off payments into your pension pot when possible, such as when you might receive a bonus from work or a lump inheritance sum.
Further, a great time to increase your pension payments could be if your salary is increased, or increasing the payments in line with inflation rises.
Make The Most of Pension Tax Relief
It is commonly known that the more you pay into your pension pot, the more tax benefits you will receive, depending on the rate of income tax that you pay.
A basic rate or non-taxpayer is entitled to 20% tax relief. A higher rate taxpayer gets 40% tax relief and an additional rate taxpayer currently gets 45%.
As such if you are a basic rate taxpayer, HMRC will pay in £20 for every £80 that you pay into your pension plan.
Diversify Your Pension Contributions
Pension savings are likely to regularly go up and down in their value. Typically, however, over longer periods, these savings will provide better returns than putting the money into a standard savings account. As such, it is always important to focus on the long term.
In order to reduce the risks associated with fluctuating valuations, you could diversify by having a mix of different types of pension investments. Many pension plans offer options that can package together different types of investments.
Ensure That You Are Regularly Reviewing Your Pension Investments
Workplace pensions will usually provide their employees with a default pension option as to where the payments will be made if they cannot make a choice. These default options are safe as they are typically designed to get your money to where it needs to be by the time you retire. They are additionally reviewed regularly.
However, it is also important to try to make some time yourself to regularly check in on your pension payments to see whether you are on track to meet your own individual plan.
Try To Bring All of Your Pension Plans Together
If you have worked in several different companies over your career, then it is likely that you have collected several different pension plans over the years. It is certainly worth combining these to get a better picture of your overall pension value.
However, it is important to check each individual pension plan as combining them could mean that you are losing out on valuable benefits or guarantees.
This article has been published in accordance with Socialnomics’ disclosure policy.