Four pension top tips to turbo charge your retirement plans this year – whatever your age – Daily Record

There are only a few weeks to go until the end of the current tax year, however, there is still time to turbo charge your pension contribution and potentially make a huge difference to your retirement, according to a senior pensions and retirement analyst at Hargreaves Lansdown.

Helen Morrissey explained that one potential quick win is to make sure you are making the most of your employer contribution. While many employers contribute at auto-enrolment minimums, there are others who will offer an employer match – this is where they will match your increased contribution up to a certain level.

Over time this can give your pension planning a significant boost so it’s well worth investigating if your employer offers it.

Helen said: “If you’ve got a bit more spare cash, you can also look at making a one-off larger contribution to your pension. Many people can contribute up to £40,000 per year to their pension and still get tax relief. While contributing £40,000 is a tall order for many people you might find it becomes possible if you have received any windfalls or inheritances.”

Making such a contribution – even as a one-off – can have a significant impact on your retirement planning and if left invested for several years could leave you with a much larger pension than you otherwise would have.

However, Helen warned: “Care must be taken if you are a high earner or have already accessed your pension as your annual allowance could be slashed to as low as £4,000. Any contributions above this amount could attract a nasty tax charge so keep an eye on what your limits are before contributing.”

Other less well-known strategies include using carry forward.

This is where you can utilise under-used annual allowances for the past three tax years to make an enhanced contribution to your pension. If you haven’t made a pension contribution for the previous three tax years, then you can potentially contribute as much as £160,000 and still get tax relief.

But, this is something only the wealthiest can consider and Helen warns they will need to check they are not affected by the tapered annual allowance before doing so.

She said: “If you’ve already maxed out your pension contributions, you can boost someone else’s. For instance, if your partner is not working then you can contribute up to £3,600 per year including tax relief to their pension. You can also so this for children via a Junior SIPP for the ultimate in family financial planning.”

Four top tips to turbo charge your retirement

  • Most people have an annual allowance of £40,000 per year. However, if you are a high earner or have already accessed a pension then your maximum contribution could be as low as £4,000 per year.
  • You can contribute more than £40,000 in a year if you have unused contributions from previous tax years. This is called carry forward and you can use unused annual allowance from the previous three tax years without incurring a tax charge.
  • Have you maxed out your employer contributions? While many employers contribute at the auto-enrolment minimum there are others who will contribute more if you do. These extra contributions can be significant and really boost your pension over time.
  • If you have maxed out your own pension contributions, you could contribute to your spouse or partner’s pension. If they don’t work, you can contribute up to £3,600 per year to their pension or if they work, they can contribute up to the amount they earn or £40,000 per year (whichever is lower). These amounts include tax relief.

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