How to boost your pension pot

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Published  06 April 2024
   4 min read

It can be hard to save enough for retirement if you're buying a home or raising a family, but it’s never too late to give your pension pot a boost.

It’s no secret that many of us struggle to put enough money into our pension pot during our working lives. Many other costs often take priority, from buying a house and raising a family to even day-to-day living expenses that can eat swiftly into disposable income.

 

How to boost your pension pot with increased contributions

Fortunately, it really is never too late to give your pension pot a boost, whether that’s by increasing your regular pension contributions or considering a few one-off contributions. Even those who're planning to give up work in just a few years can always find ways to add to their pension savings. Keep reading to discover how to boost your pension.

 

1. Top up your State Pension

Almost everyone is eligible for the State Pension which provides a good base to build your retirement fund on.

The new State Pension offers £221.20 per week in the 2024/25 tax year, although only those who meet the National Insurance requirements qualify for the full amount. That means that pension contributions must have been paid for at least 35 years, while those with gaps in their National Insurance record – perhaps because of time spent abroad or periods of self-employment on low earnings – may not receive a full State Pension.

Curious about how to increase your State Pension? Everyone who's approaching pension age should firstly ask for a pension forecast online. You may be able to top up your National Insurance record by making voluntary contributions. Start by requesting your National Insurance record to establish whether it's possible to fill in the gaps.

The cost of topping up is subsidised by the Government, so it can be an effective way to increase your pension pot. The amount you'll have to pay and the periods for which you can make extra payments will vary according to your individual records.

 

2. Keep track of your pension pots

Have you had a few different jobs and experienced several home moves over the years? Make sure you've kept track of all your private and company pension schemes- these can be easy to forget or overlook. The Government offers a pension tracking service to help anyone who thinks they may have an entitlement from a former employer. You can also find out more about finding a lost pension in our guide.

Even those who're close to retirement age should consider putting as much as they can into their pension. This is especially important due to the generous pension tax relief. For higher earners, the government gives 40% tax relief.

What’s more, the larger the sum you have in your pension pot when you retire, the greater flexibility you'll have about how and when to take your benefits.

 

3. Make additional contributions to your State Pension

As well as making the most of your State Pension pot, there's still scope to do more. So, how can you do this?

You could increase your regular contributions to your pension, if your budget allows. You may find that your employer increases their contribution too if you’re in a workplace pension.

If you have a lump sum of money currently doing nothing in a savings account, you could consider adding some or all of it into a pension as a one-off contribution.

Both of these are brilliant ways of helping your pension savings grow and can come with some good tax benefits. Personal contributions made to a pension get tax relief on up to 100% of their relevant UK earnings (earned income). This tax relief is given at your marginal rate of tax, so if you're a 40% tax payer you'll get tax relief at 40% for as much as you pay it. However, there's an annual limit on the total contributions that can paid into your pension in a tax year before you may be subject to a tax charge. This is known as the annual allowance and is currently £60,000. Those who are higher earnings and/or have flexibly accessed their pension could be subject to a lower annual allowance. See a financial adviser for further information.

4. Do what works for you

These days, retirement need not be at a fixed time. A growing number of people are opting to phase their retirement, whether by reducing working hours at their existing job, moving to a new part-time job or by starting their own business.

These earnings can easily top up income from pensions or allow you to take less of your pension income immediately, leaving more to spread out across later years. Ensuring you’re putting what you can into your pension while you’re still working is vital as it’s one of the most tax-efficient ways to save money for the future.

Ultimately, your pension should be working for you and your individual needs.

You can also find more retirement guidance and try our pension calculator

Try our pension calculator Get more retirement guidance