The New Year is upon us, and many will be thinking about how to get financially fit in 2026. It can be easy to get overwhelmed and think that the answer lies in complex plans, but this doesn’t have to be the case for your retirement planning.
Here are some relatively quick steps to take over the course of the year that can really pay off in the long term. Taking the time to check on your retirement saving is a resolution you will be very glad you kept.
This article isn’t personal advice. Remember, you can access money in a pension from age 55 (rising to 57 in 2028). If you’re not sure if an action is right for you, ask for financial advice.
Check if you are on track with your pension
If you don’t know how much you’ve got in your pension, then you don’t really know if you’re on track. This can either lead to overconfidence as you assume you’re saving enough or worrying unnecessarily about a gap that doesn’t exist.
Recent data from HL’s Savings and Resilience Barometer shows that only 43% of households are on track for an adequate retirement income. Even higher earners are at risk of under saving and being unable to maintain their lifestyle when they retire.
Taking the time to periodically check how much you’ve got using an online pension calculator will either give you peace of mind that you’re on track or the time to do something about it if you aren’t.
Can you boost your contributions?
It can be easy to just contribute at auto-enrolment minimum levels, but is this enough for the retirement you want? Online calculators can help you model the impact of paying in extra contributions.
If money is tight and you can’t afford to right now, think about boosting your contributions every time you get a pay increase or new role.
It’s also worth checking if your employer will increase their contribution if you increase yours. This is known as an employer match and can make a big difference to what you end up with.
Claim your tax relief
Tax relief is a great incentive to save into a pension, but you might not be getting all you’re entitled to.
If you’re a higher or additional rate taxpayer paying into what’s known as a relief at source pension arrangement, then you will only have basic rate relief taken automatically and will need to reclaim the rest. Remember, for Scottish taxpayers, rates and bands are different.
Many private pensions, liked Self-Invested Personal Pensions (SIPPs) and some workplace pensions, are set up as relief at source schemes, with contributions deducted from your salary after tax. The employer takes 80% of the contribution from the employee’s salary and then reclaims the extra 20% from HMRC. This means if you’re entitled to tax relief at a higher rate, then you need to reclaim it yourself, which you can do via online self-assessment.
If your pension is set up as a net pay arrangement (where your pension contribution is deducted from your salary before income tax is paid), then your scheme claims back tax relief at your marginal rate of income tax. So, you don’t need to do anything else.
Similarly, if your pension is set up as a salary sacrifice arrangement, you won’t need to reclaim extra relief.
If you’ve missed claiming this relief in the past, don’t worry, you can still backdate claims for the past four tax years. You will need to keep records of your contributions for these periods in case HMRC asks for them.
Pension and tax rules can change, and any benefits depend on your circumstances.
Track down a lost pension
If you’ve had a few different jobs over the years, then chances are you might have lost track of a pension, or two. Now this could leave a hole in your retirement planning worth thousands of pounds.
Make sure to go through your pension paperwork and if you think you’ve lost track of a pension, then use the government’s Pension Tracing Service. You will need either the name of your employer or the pension provider. It can’t tell you if you have a pension but it can give you contact details so you can find out.
Is it worth consolidating?
Once you’ve tracked down all your pensions, it might be worth consolidating them.
Having one overarching view of what you have can save you time, money and admin. It can also lead to better decision making as you might be tempted to take small pensions as lump sums and spend them.
But, before you consolidate, make sure you aren’t at risk of incurring expensive exit penalties or missing out on valuable features like guaranteed annuity rates. It also very rarely makes sense to transfer out of a defined benefit scheme.