Five ways to boost your pension in 2024

When building your pension, it’s worth considering whether you could supercharge your retirement savings.

After all, saving enough to fund a comfortable retirement can be a challenge. The latest Kantar – RBC Wealth Management survey shows the biggest financial concern for a quarter (25%) of high-net-worth investors is how much they should save to maintain their lifestyle in retirement¹.

A financial adviser can arm you with the right knowledge to maximise your pension, but in the meantime, these five tips could help get you started.

1. Increase your pension contributions

Consider whether you can afford to increase your pension contributions. Most people can pay in up to 100% of their UK relevant earnings or £60,000, whichever is lower, in the 2024/25 tax year and benefit from tax relief on the contributions. This is known as your pension annual allowance.

You could use a work bonus or surplus funds, for example to pay a lump sum into your pension. If you’re employed, see if your company will pay more into your pension on your behalf if you increase your contributions.

If you’re self-employed, making pension contributions may be more tax-efficient than paying yourself a salary, according to Michelle Holgate, Divisional Director of Financial Planning at RBC Brewin Dolphin. You will need to check that you have sufficient income to meet your expenditure from all other sources and whether the contributions to your pension are allowable for tax purposes. A financial adviser will be able to help you make this assessment and complete the appropriate paperwork.

Bear in mind that if you exceed your pension annual allowance, you’ll have to pay an annual allowance charge. This essentially claws back any tax relief received on the excess contribution. If you aren’t sure how much your annual allowance is, or you’re concerned about exceeding it, speak to a financial or personal tax adviser.

2. Set up salary sacrifice

Check if your employer offers a salary sacrifice arrangement for contributing to your workplace pension. This involves exchanging part of your salary for an employer pension contribution to grow your retirement savings. Salary sacrifice can also reduce the amount of tax and national insurance (NI) you pay by lowering your gross salary. However, bear in mind that using salary sacrifice may affect benefit entitlements or borrowing potential now or in the future.

Salary sacrifice may be used by any type of workplace pension scheme. If you’re considering this, ask your employer if they offer this arrangement. Make sure you understand how it works before signing up, and that you can afford to give up some of your salary in return for pension contributions.

3. Track down lost pensions

You may pay into lots of different pensions during the course of your working life, and losing track of any of these could make a big difference to your retirement savings.

It’s worth spending some time tracking down any lost pensions. Start by making a list of previous employers, and ensuring you have up-to-date pension valuations.

You could use the government’s free pension tracing service to track down any lost pensions. It’s a simple online questionnaire that provides contact details, but you’ll need to name your former employers to help with the tracking process.

4. Pay into a personal pension

You could pay into a personal pension in addition to your workplace pension scheme, if you can afford to do so. This can increase your retirement savings, and your own pension plan may give you greater investment choice than your workplace scheme offers.

You won’t benefit from employer contributions in a private pension (and it’s important to maximise these first), but you should still receive tax relief at your marginal rate. There are different types of private pensions, including standard personal pensions, and self-invested personal pensions (SIPPs). They vary widely in terms of investment choice, and charges, so compare your options carefully and speak to a financial or personal tax adviser if you’re unsure which option is best for you.

5. Delay pension withdrawals

You can access money in defined contribution (DC) pensions from age 55 (rising to 57 in April 2028). However, you don’t have to turn on the income tap when you reach that age. You can continue paying into your pension and benefit from tax relief until age 75 (subject to some limitations). This gives your pension more time to grow in value to provide for retirement.

If you move your pension into flexi-access drawdown and start taking an income, the pension annual allowance will be replaced by the money purchase annual allowance (MPPA), which is £10,000 for the 2024/25 tax year.

You may want to access other savings such as ISAs before dipping into your pension. Withdrawals from ISAs are completely tax free, while any income you draw above your 25% tax-free lump sum from a pension is taxed at your marginal rate.

Seek advice

Retirement planning can be complex, and the rules can change frequently, so you may wish to speak to a financial or personal tax adviser to help decide the best course for you. Whatever your personal circumstances, getting some advice can provide you with peace of mind

A financial adviser can develop a plan to ensure your retirement savings are on track, including investing them appropriately to produce enough income in retirement.

^[1] Source: Kantar – RBC Wealth Management UK brand tracking survey, October 2023. Sample: 600 UK-based high-net-worth individuals.

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The value of investments, and any income from them, can fall and you may get back less than you invested. This does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Information is provided only as an example and is not a recommendation to pursue a particular strategy.