Low and No-Cost Options to Top Up Your Pension Income

Whether you’re close to retirement, making plans for the future or have already started drawing on your pension savings, it’s always worthwhile to look out for opportunities to add to your pension pot.

Here are our top tips for topping up your pension income, ranging from spending a little more on contributions now for benefits later in life to free ways to maximise your retirement savings.

Traditional Pension Top-Ups: Spend Now to Benefit Later

If you are in a position to devote some disposable income to your pension savings, you can look forward to a more comfortable retirement.

Members of employer pension schemes can investigate the value of increasing contributions beyond the auto-enrolment minimum. In addition to your own higher contribution, your employer may increase the sum they contribute, further enhancing the benefits you’ll receive later in life. Alternatively, salary sacrifice schemes allow you to divert more of your income into your retirement savings in a very efficient manner benefitting from Income Tax and National Insurance savings.

Whether you already have an employer pension or private arrangements, savers with sufficient resources could also consider taking out an additional private pension. These schemes, such as stakeholder plans, personal pensions and self-invested personal pensions (SIPPs), don’t come with employer contributions but do offer tax relief and, often, more control over your investment choices.  

Additionally, if there are gaps in your National Insurance contribution history, it may be worthwhile for you to make top-up payments in order to ensure you receive the full State Pension allowance. You can check your National Insurance record and State Pension forecast for free on the UK Government’s website, and find out how much you may need to contribute to catch up.

Smart Spending: Switches and Swaps to Boost Your Pension Pot

Maximising your retirement savings needn’t require extra spending – these tips can help you take advantage of changes in your financial circumstances.

If you’ve been making regular payments on a debt that’s due to be repaid – for example car loans, credit cards, mortgages or other regular payments – consider contributing the same monthly amount to your retirement account once the debt is settled. Your monthly outgoings will remain consistent but your payments will now be going straight into your own pension pot.

Another way to benefit from changes in your financial circumstances is to allocate some or all of any unexpected windfall to your pension. Whether it’s a bonus, inheritance, redundancy payment or cash prize, it may be more valuable as a boost to your retirement account than spending the money now.

If you’re approaching State Pension age, you may still be working or drawing income from a private pension. In this instance, you may benefit from deferring your State Pension rather than withdrawing it as soon as you’re eligible. The government increases the amount of your State Pension, at no extra cost to you, by 1% for every nine weeks you delay making your first claim, meaning that if you defer for 52 weeks, you will receive an extra £10.42 each week once you do start to claim.

Free Ways to Maximise Your Pension Income

Our experts recommend that everyone follow these no-cost options to maximise your retirement income.

The first step is to make sure you keep track of all the pensions you’ve saved into over the years. Old and abandoned pensions currently hold billions of pounds people have saved and never claimed – make sure you don’t lose out on what’s rightfully yours. As well as working with an award-winning team like McCrea, you can track these pensions down yourself using the government’s Pension Tracing Service.

You can also look into your options around charges and choice of investment funds. Depending on the type of pension you have, you may be able to switch to funds with lower charges, better investment performance, or greater diversity. This can potentially be better value and a closer match to your priorities and circumstances. In addition, it is important to consider if the level of risk on your pensions is correct as your focus and timescale to retirement changes.

It Pays to Work With An Expert

Whatever your pension plans, it pays to work with an expert like McCrea. We’re fully independent, offering you unbiased advice that’s right for your circumstances, and our award-winning performance shows our pensions expertise is second to none. Whether we’re tracing your lost pensions, assessing your investment and tax relief options, making sure you’re receiving your full entitlements or helping you create your retirement plans, we’re here to make financial planning a source of confidence, not confusion. Why not get in touch today for an initial chat on how we can enhance your retirement plans?