Strategies to keep your pension healthy in later life

Nobody wants to consider that one day they might be older and earning considerably less. However, this could be the reality if we don’t regularly contribute to a pension scheme. If you’re concerned about how much you will earn in total once you reach retirement age, the expert pension specialists at Portafina have devised a few strategies to improve your pension’s performance.

Get a pension review

Getting a pension review essentially just means getting a professional to assess whether you’re earning the most you possibly could in pension contributions. Poor rates and charges on your current scheme could be impinging on how much you receive. If you’ve had multiple pension schemes with previous employers, it’s worth getting these looked at, too. Don’t worry about how long ago you worked for that employer - those savings accounts belong to you! These too could be earning a poor rate, so it’ll be well worth your while getting these seen by a regulated financial adviser, like Portafina. Click here for more information on receiving a no obligation pension review. Receiving one could mean you have more money stowed away for your later life.

Join your employer’s scheme

When you start work with a new employer, you should be automatically enrolled in their pension scheme on two provisions:

• You’re over the age of 22
• If you earn over £10,000

Once you enrol, your pension should include the following contributions:

• The money you put it in
• Your employer’s contributions
• Tax relief

When this all adds up, it will contribute around 8% of your annual income. Avoiding your employer’s pension scheme could see you missing out on thousands of pound’s worth of pension contributions.

Ensure you continue to make NI contributions

If you’re looking to have plenty of pounds in your retirement account to enjoy a healthy and comfortable retirement, then it’s not necessarily a wise idea to rely on the State Pension, as it’s not realistically going to provide you with an affluent lifestyle. Moreover, there’s a risk you might not even receive the full amount, as you’d need to have been making National Insurance contributions for 35 years. It’s also worth noting that it is the 35 years that counts you don’t have to have been making them consecutively. However, if you miss out a contribution, or form a ‘gap,’ it may deplete how much you receive on the state pension.

Claim income tax relief

One huge benefit of saving for a pension is tax relief. This provides a bit of a boost to your savings, as tax relief is claimed back from the government both by employers and personal pension providers. Of course, this depends on your particular pension scheme, and whether or not you are on a higher or additional rate tax paying scheme. If this is the case, you will need to claim tax relief using self-assessment forms from HMRC. If you’re unsure about what this is or how to claim it, then be sure to contact us by finding our details on our website or Facebook page.

Ignore minimums but be aware of maximums

When it comes to any pension pot – either personal or your employer’s - there’s absolutely no requirement to only put in the minimum amount. If you happen to acquire a bit of extra money, do consider investing it wisely in your pension.

If you’re wondering if there’s an absolute total on how much you can put into your pension, then the answer is yes. It’s capped at £40,000 and is known as your ‘pension annual allowance.’ This accounts for both your contributions and your employer’s. Don’t be tempted to exceed this as you will receive fines for doing so.

The good news is you can avoid this, but carrying over this allowance, and you’re allowed to do this from up to three years prior. This will be permitted on the provision that your annual allowance has been met.

If you would like to know more about how to keep your pension healthy in your later years, then follow Portafina on Youtube, Twitter and Linkedin.