Under 75? It’s not too late to make your retirement pop

A recent study shows a staggering 90% of over 50s now expect their state pension to help fund their retirement. And only around half have any retirement savings at all.

This makes for some seriously scary reading as the annual income we can receive from the new state pension is now just £9,110 (2020/21). This is assuming that you’ve got at least 35 qualifying years on your national insurance record, so lots of people might get even less. With over a quarter of over-50s completely without any company or personal pension at all, if we don’t do something about it our futures could be less chic and more cheap.

However, all is not lost yet. For today’s 50-somethings who don’t have much in the way of a pension pot there are some important things you can do now, to make your retirement a little more comfortable.

This article isn't personal advice. If you're unsure whether a course of action is right for you, please ask for advice. Pension and tax rules can and do change and any benefits will be dependent on your own circumstances.

1. Check for old workplace pensions

A defined contribution pension is one where you pay into a pot and the money can be invested. What you get at retirement depends on how much you’ve saved and how well your investments do.

Amazingly, in the UK there are estimated to be around 1.6 million defined contribution pensions worth roughly £19.4 billion left unclaimed. The average pot could be worth around £13,000 – that alone could make a difference to anyone’s retirement, especially if you have more than one. Remember that investments can grow in value over time so your pension pot could be even bigger than what you remember.

To help boost your pension pot, the first thing to do is go back through your various workplaces to check if you have any forgotten pensions. You should be able to find out through old paper work, by contacting your former employers or by contacting the Pension Tracing Service.

The most common cause of lost pensions is a change of address. Studies show that only one in 25 of us think about telling our pension provider when we move to a new house. So it might be useful to keep a record of where you were living at the time of different employments. This could help track down any lost pensions.

Once you have your various workplace pensions organised, it might be easier to keep track of them by bringing them all together into one pension plan. You could consider transferring into a Self-Invested Personal Pension (SIPP). Before transferring a pension you should always check the costs involved first and whether you’d lose any valuable benefits.

2. Top-up any gaps in your National Insurance record

To qualify for any new state pension at all, you’ll need to have at least ten qualifying years on your national insurance record. To get the maximum state pension of £9,110 per year or £175.20 per week, you’ll need at least 35 years.

If you have any gaps in your national insurance record you might be able to pay voluntary contributions to fill some, or all, of these. You can check your national insurance record and make voluntary contributions on the government website.

3. Take control with a Self-Invested Personal Pension

If you’re employed, look at your workplace pension as a first port of call. When you pay into your pension, your employer normally does too, and you also get tax relief.

If you’re self-employed, have a private pension or want a bit more flexibility then you could also think about a SIPP.

If you’re a UK resident under the age of 75 you’ll get a 20% top-up in the form of tax relief for money you put into a pension, including money put into a SIPP. You can normally pay in as much as you earn to pensions (or £3,600 if lower) and receive tax relief, subject to an annual allowance, which is £40,000 for most people.

Read more about tax relief

For those in their 50s, adding to your SIPP regularly means you can benefit from the top-ups. You can leave it as cash or look to invest it into the stock market to try and get better returns. Remember though unlike the security of cash, investments can fall as well as rise in value and you could get back less than you invest.

Learn more about investing

You can continue to put money in your SIPP and benefit from tax relief until the age of 75. This gives an extra decade or two for your retirement income to grow and for the top-ups to build up.

Of course, you need to do what it right for you, and what you can afford. When you invest in a personal pension, like a SIPP, you should know that you won’t normally be able to take out that money before the age of 55 (rising to 57 in 2028).

Learn more about the HL SIPP

Hannah Duncan is an investment writer, and founder of Hannah Duncan Investment Content, with years of experience producing content for global leaders in finance and retail.

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