Unlike other types of savings plans, pensions benefit from tax relief. So for every 80 pence you put into a pension; the taxman will turn it into £1.
No strings or catches – just an easy way of making your money work harder for you.
Let’s look at an example for someone who pays basic rate tax.
- You decide to contribute £100 each month.
- Because of tax relief, you only have to contribute £80.
- The taxman will contribute the other £20.
- Your employer agrees to match your contribution, so your £80 quickly becomes £200.
Of course, tax relief depends on your individual circumstances and could change.
You can make single contributions into your plan at any time. So if you find yourself with spare cash, you could add it to your plan.
You can transfer retirement savings from other pension plans. This could make it easier for you to keep track of them.
Transfer payments from one pension plan to another don’t receive tax relief. Transferring may not be in your best interests as you could lose valuable benefits which can’t be replaced. You should speak to a financial adviser before you make a decision.
Investing your retirement savings
Your retirement savings are locked away until you reach age 55 and invested to help them grow.
And the longer your money’s invested, the more time it has to grow. So the earlier you start saving, the better off you could be.
Of course, this isn’t guaranteed. So if your investments perform poorly, you could get back less than you started with.
Your retirement options
When you reach age 55, you can access your retirement savings – even if you’re still working. And you’ll have three main ways to enjoy the money you’ve saved – buy a secure income, dip in when it suits you or take it all as cash. You can also take up to a quarter of your retirement savings completely tax free.
Find out more about your retirement options.