Most people want to retire ‘early’. But the reality is that a lot won’t and it’s often easier said than done.
With the end of the tax year fast approaching, now is one of the most important times to think about your retirement savings — especially if you still have unused pension allowances.
That’s because many people only start thinking about their pensions much later down the line, often when it’s too late to make a meaningful difference.
In fact, a recent survey from Which? found that just under half of over 2,000 adults had put off thinking about retirement because they found it too stressful.
But pensions don’t have to be complicated. What’s important is putting in what you can afford, as early as possible, to help give your money more time to grow.
Using a pension calculator is a simple way to get started — helping you understand how much you might need and whether you’re on track.
If you’re not on track for the retirement you want, here are 4 easy tips to help boost your pension pot.
How to boost your retirement pot before the end of the tax year
1. Use your pension allowances before the deadline
With the tax year end approaching, using any unused allowance before the deadline could be particularly valuable.
What is the annual pension allowance?
You can usually contribute up to £60,000 into your pension each tax year, or 100% of your earnings (whichever is lower), and receive tax relief.
If your income is over £200,000 and your total ‘adjusted income’ (including employer pension contributions) exceeds £260,000, your annual allowance may gradually reduce to as little as £10,000 – but speak to a financial planner for more information on this, as everyone’s situation is different
However, if you haven’t used your full allowance in recent years, you may be able to bring it forward.
How carry forward works
Carry forward means you can use any unused allowance from the past three tax years, on top of this year’s £60,000 limit, provided you were a member of a registered pension scheme.
For example, if you hadn’t used any of your allowance over the last three years, you could potentially contribute up to £220,000 in a single tax year — as long as you earn enough.
Making the most of these allowances can give your retirement savings a meaningful boost.
2. Understand how pension tax relief works
When you pay into a pension you get tax relief on your contributions, effectively boosting them with money from the government.
For basic-rate taxpayers (20%), this happens automatically.
For example, if you contribute £8,000, the government adds £2,000 — meaning £10,000 goes into your pension.
If you’re a higher-rate (40%) or additional-rate (45%) taxpayer, you may be entitled to even more tax relief.
In many cases, you’ll need to claim this extra amount through your self-assessment tax return. Claims will also normally need to be made within four years of the end of the tax year in which the contributions were made.
However, depending on how your pension is set up, you might not need to do anything.
If your pension uses a net pay arrangement or salary sacrifice, tax relief is applied automatically at your highest rate.
If it’s set up under relief at source, you may need to claim the additional relief yourself.
It’s worth checking how your pension is set up to make sure you’re getting the full benefit.
On top of tax relief, your investments can grow free from capital gains tax, and you won’t pay income tax on any growth until you access it.
Just remember, you can’t usually access your pension until age 55 (rising to 57 from 2028), and for most people, total contributions are capped at £60,000 each tax year. Higher earners may see this reduced under the tapered annual allowance.
An easy way to claim back tax relief
You normally have to fill in a self-assessment tax return each year to get your extra tax relief, which can feel like a headache.
That’s why we’ve partnered with PIE. Instead of wrestling with forms, you can:
- Log in to PIE through your InvestEngine dashboard
- Enter how much you’ve contributed (clearly shown in your transactions)
- PIE reclaims your extra relief from HMRC on your behalf
No forms. No hassle. Just money back.
If you’re looking for a flexible way to put this into practice, an InvestEngine Self-Invested Personal Pension (SIPP) can help you make the most of pension tax relief.
With a SIPP, you can choose how your money is invested, make one-off or regular contributions, and ensure you’re taking full advantage of the tax benefits available.
3. Make the most of your workplace pension
With less than a week to go until the end of the tax year, there may be limited time to make changes now, but your workplace pension is still one of the easiest ways to boost your retirement savings over the long term.
Under auto-enrolment, you’ll typically contribute 5% of your salary, with your employer adding at least 3%.
But this is just the minimum.
Lots of employers offer more generous contributions, so it’s worth checking what’s available to you.
In some cases, employers will even match any extra contributions you make.
That means increasing how much you’re putting into your pension could effectively give you an immediate boost to your retirement savings — with extra money coming directly from your employer.
And on top of that, putting money into your pension can help reduce your tax bill.
If your workplace pension is set up through salary sacrifice (again, if you’re not sure just ask them), increasing how much you’re putting into your pension lowers your salary before you pay income tax. And it can reduce how much National Insurance (NI) you pay too.
Even if your employer doesn’t offer salary sacrifice, paying more into your pension can still help reduce your taxable income.
4. Find and combine old pension pots
With the tax year end approaching, it can be a good time to take stock of your existing pensions, especially if you’ve built up multiple pots over the years.
The average UK worker will hold 9 jobs during their lifetime and work for 6 different employers.
We recently asked investors how many pension pots they had. Over half of people said they had between two and three, 15% said they had four or more, and 6% weren’t sure at all.
Why consolidating pensions can help
Finding lost pensions and bringing them all under one roof can make things easier to manage.
It means you don’t have to juggle lots of different login details and you can get a better sense of if you’re on track for the retirement you want.
It can also make it easier to review your investments and ensure everything is aligned — particularly as you head into a new tax year.
Plus you could get up to £5,000 by transferring them to InvestEngine (more on that below).
How to find lost pensions and combine them
A good place to start is thinking about all of the places you’ve worked at in the past.
Do you have pensions for those places, even if you worked there for a short timeframe or even part-time?
If you find any gaps then you can use the government’s Pension Tracing Service to help you track down any lost pots. It won’t tell you if you have any lost pots, but they can provide you with the contact details you need to contact the relevant pension providers.
You can also call the Pension Tracing Service on 0800 731 0175 – Monday to Friday, 10am to 3pm.
Transfer your pensions and get up to £5,000
Got pensions that you want to bring under one roof?
Not only are we now accepting more pension transfers from almost all the major pension providers, but we’re also currently offering up to £5,000 cashback when you transfer to us.
Get up to £5,000 when you transfer
It’s easy to transfer your existing SIPP to InvestEngine for fee-free investing. You could also get up to £5,000 when you do switch. ETF costs apply. The bonus is tiered and requires your investment to remain invested for at least 12 months.
Find out moreCapital at risk. Ts&Cs apply
Before transferring, please review any fees, exit costs and whether your existing investments would need to be sold and reinvested into ETFs. It’s also worth making sure you won’t be losing out on any valuable benefits like guaranteed annuity rates. And if you’re on a final salary pension, it usually doesn’t make sense to transfer it because of the guaranteed income on offer.
Important information
Capital at risk. The value of your investments may go down as well as up, and you may get back less than you invest.
ETF costs apply. Remember, pension and tax rules can change and any benefits depend on individual circumstances. If in doubt, you may wish to consult a professional adviser for guidance.