By Esmée Hardwick-Slack
Research suggests that on average, you may need an income of around £26,000 a year to fund a comfortable retirement. Whether you’re just starting to pension plan or are looking to retire soon, there’s never any harm in looking at ways to boost your pension savings.
State Pension
Check your State Pension entitlement to help determine how much you’re likely to receive when you reach state pension age – and whether you’ll need to top it up. As of 2019, the state pension age is 65 for both men and women, this will increase to 66 by October 2020.
You can also defer your basic state pension. This is especially helpful if you’re still working, as it means you’ll get larger pension payments later. You can also do this once you’ve already started claiming, although you can only do this once.
National Insurance Credits
You pay National Insurance out of your salary, if you earn over a certain threshold. You need to 35 years’ worth of National Insurance contributions to get the full amount of state Pension when you reach state pension age.
National Insurance credits allow you to fill in the gaps on your National Insurance record when you’re not working and are unable to make contributions – e.g. if you’re unemployed, caring or a child or ill or disable etc… The credits go towards building qualifying years for your state pension and could help boost your final entitlement.
Some of these credits are added automatically but you’ll have to apply to others, therefore it’s worth checking your eligibility.
Pension contributions
If you’re a UK taxpayer, making the most of your pension contributions in the years before retirement can boost your pot in the form of tax relief. The rate you get depends on the amount of income tax you pay, so you could get between 20-45% depending on how much you earn. Check out the Which? Pension calculator to find out how much tax relief you can get on your pension.
It’s worth maximising your employer’s contributions. When you increase your contribution to your workplace or private pension, your employer may also boost their contribution. From the 6th April 2019, the minimum employer contribution will increase from 2% to 3%, and the minimum employee contribution will raise from 5% to 8%.
Past pension pots
According to research by the UK’s Pension Policy Institute, up to £20bn of retirement cash could be sitting in dormant pension pots, waiting to claimed by 1.6m people. Lost pensions have become more common since millions of workers have been auto enrolled in workplace pensions. Most people will have several different employers over the course of their working life, meaning you may have more than one pension pot out there. If you believe you may have forgotten about an old pension pot, the government-backed Pension Tracing Service can help you find it.
Keep track
Keeping on top of your contributions will help you stay on track with your savings. Be sure to contact your pension’s provider to see what the best way to track your pensions is.
Later this year the Pensions Dashboard is expected to be introduced, which will allow you to view all of you pensions data in one online platform.
Watch out for scams
According to research by the Financial Conduct Authority and The Pensions Regulator, victims of pension’s fraud lost an average of £91,000 each in 2017. Cold-calling is a common tactic used by scammers, with an estimated 8 scam calls being made every second. As of January 2019, all unsolicited calls about pensions are now illegal and companies could face fines of up to £500,000 if they break the rules. However, fraudsters may ignore this ban or find a way to get around it, so it’s important to remain alert.
The more sophisticated scams can be more difficult to spot – but there are a few things you can look out for:
Unexpected calls or messages – if someone contacts you out of the blue to question you about your personal information or to offer you investment opportunities, it is likely that they are not to be trusted.
Their offer sounds too good to be true – Scams often succeed because they offer something appealing to the victim, but this is often an unrealistic promise – or one with a high level of risk.
They put on the pressure – Whether it’s a limited offer or a warning that you should act ASAP, putting pressure on you to give a quick response is a tactic used to persuade you to agree to something without giving it any real thought.
Double check any pension investment offers on the FCA’s ScamSmart website or use the Governments free and impartial Pension Wise service for guidance on any questionable calls you may have received regarding your pension.
If you’re confused about any aspect of your pension or want advice on how to plan your future then it’s a good idea to get some help. You could talk to your pension provider or contact the Pensions Advisory Service helpline for free. You can also contact us for Auto enrolment advice or to discuss your personal pension options.
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