Tax, investments and pension rules can change over time so the information below may not be current. This article was correct at the time of publishing.

Tips to get the most out of your Pension

At Four Wealth Management, a priority for many of our clients is planning for retirement and getting the most out of their pension.

Below are some tips that could help you have a more comfortable retirement.


Make the most of Tax Relief

A pension is one of the most tax-efficient ways to save. When you save into a pension, the Government provides tax relief, which is automatically added into your pension. The tax relief is equivalent to your income tax, basic-rate taxpayers get 20% pension tax relief, higher-rate taxpayers can claim 40% pension tax relief and additional-rate taxpayers can claim 45% pension tax relief.

For example, if you are a basic rate taxpayer, if you add £80 to your pension, the Government will automatically add £20. Tax relief reduces the cost to you and increases the contribution into your pension.

Normally only 20% tax relief is added automatically to your pension. Higher and additional-rate tax payers need to claim the additional rates via a tax return.


Review What you Pay in

You should start contributing to your pension as early as possible in order to take advantage of compound growth. Compound growth is when your invested pension pot grows over time.  Saving a small amount into your pension early will maximise the amount of time that the money has the potential to grow. Find out more about starting a pension.

Review Contributions to Pension

Many employees are automatically enrolled into a pension scheme in their workplace. However, the automatic contributions from your employer may not be enough to enable you to meet your retirement goals. It is important to review the amount of money that you are contributing to your pension and increase it if possible.

If you receive a pay rise, you should ideally increase your contributions accordingly.

If you are unsure of how much you should be contributing monthly in order to build a pension pot designed for you to retire comfortably, our advisers can help you to calculate this. Typically, most people require two-thirds of their salary per year when they retire. It is important to remember that depending on your National Insurance contributions you are also likely to receive the state pension, which in the 2019/20 tax year is £168.60 per week.

Book A Face To Face Financial Review

Keep an Eye on Pension Costs

It is important that you know how much you are paying to hold your pension with your current provider as the costs may be lower elsewhere for the same service. Our advisers can look into your current pension plans and review the charges for you.

Combining your pension pots may mean you are able to reduce the charges you pay, as older pensions often have higher fees than newer schemes.

Make a Plan

Planning your retirement early will give you the best chance of achieving your retirement goals. At Four Wealth Management, we can work with you to assess how much income you could need at retirement and how you can achieve this. We can also discuss the retirement options available to you, including drawdown and annuities; we will work with you to determine which is suitable for your individual circumstances.

Rebalance Your Portfolio Prior To Retirement

You should regularly review your retirement plan to check you are on track to meet your goals. As you near retirement your portfolio will need to be rebalanced to help reduce risk and help you to calculate approximately how much income you could receive from your savings when you retire. A Four Wealth Management adviser can review your portfolio to help mitigate risk and maximise your savings. Regular rebalancing and reviews of your portfolio will help make your pension work as hard as it possibly can for you.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation can change at any time. The value of any tax relief depends on individual circumstances.

Enquire Now

If you have any queries or would like to arrange a face to face meeting with an adviser for a no obligation review of your personal finances, simply book a call back using the form below. Alternatively, you can call us on 0117 973 0500.

The Partner together with St. James's Place Wealth Management plc are the data controllers of any personal data you provide to us. For further information on our uses of your personal data, please see the Partner's Privacy Policy or the St. James's Place Privacy Policy.

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