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What would make you pay more into your pension?

We asked what makes people save more into their pensions. Here are the top reasons, and two top tips to help you boost your pension pot.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

The more you pay into your pension, the more potential there is to reach your retirement and income goals. That’s why it’s important to regularly review how much you pay in.

When you first open your pension, it can be easy to set up your payments and then forget about them. But over time your motivations and affordability might change.

To help you make the most of your pension, we look at the most common reasons why people top up their pensions (according to our recent survey*), and two top tips to help you boost your pension pot.

*Opinium survey for HL, September 2021, 2,039 participants.

We hope you find this article helpful, but it isn’t personal advice. If you’re thinking about adding money to a pension, remember you can’t usually take money out of a pension until at least age 55 (rising to 57 from 2028). Investments will rise and fall in value, so you could get back less than you invest. If you’re not sure what’s right for you, ask for financial advice.

What would make investors pay more into their pension?

1. Getting a pay rise

Over a third of people agree that a pay rise would convince them to increase their pension payments. If you’re lucky enough to have had a raise or a bonus recently, and you’re thinking of using it to boost your retirement savings, make sure you check a couple of things first.

If you have a workplace pension, your contributions aren’t guaranteed to automatically increase in line with any pay rise. For example, if your contributions are set at a value rather than as a percentage of your salary, any pay rise won’t be reflected in your monthly payments. You’ll need to talk to your employer or pension provider first and ask to make these adjustments.

Likewise, some employers might also offer a bonus sacrifice (which works in a similar way to salary sacrifice). You can choose to give up some, or all, of your bonus and have it paid it into your pension. You’ll benefit by not having to pay National Insurance or income tax on the amount you give up. But again, this won’t happen automatically – you’ll need to apply.

2. Employers who match higher payments

The second most common answer was that people would pay more into their pension if their employer did too. 

While lots of employers only pay minimum contributions, as set out under auto-enrolment rules (3% of your qualifying earnings), others are willing to pay more. It’s always worth asking if you can benefit from extra employer contributions. Some will match your extra contributions up to a certain level. This can make a real difference to your income in retirement.

3. Trusted guidance or advice on shortfalls

Knowing how much you need to retire and whether you’re on track isn’t always easy to figure out. Almost one in five people said they would contribute more if they were advised to. Others said they would be spurred to act if a reliable finance calculator showed that they had a shortfall.  

If you’re not sure how much you should be paying into a pension or if you’re on track to retire when planned, try our pension calculator. It will show you what your pension might pay and what you could consider if there’s a shortfall against any pre-set income targets.


Two tips to boost your pension pot

1. Don’t forget about pension tax relief

Under current pension rules, if you’re a UK resident under 75, the government adds 20% on top of your personal pension contributions – essentially giving you back tax paid on the money. If you pay a higher rate of tax, you could claim back even more in tax relief through your tax return.

Let’s say you’re a basic rate taxpayer. For every £800 you contribute, the government will top it up to £1,000. If you pay tax at 40%, then a £1,000 pension contribution could cost you as little as £600. As a 45% taxpayer, it could cost you as little as £550.

Pension and tax rules can change, and any benefits depend on your circumstances. Tax bands and rates are different for Scottish taxpayers.

More on tax relief

2. See if you can make use of unused allowances

You can usually add as much as you earn and receive tax relief each year. There’s also an annual allowance, which is £40,000 for most people, that limits what can be paid in. If you didn’t use up your full allowance in the previous three tax years, you might be able to carry any unused allowance forward and pay more into your pension.

To be able to carry forward unused allowances, you need to have been a member of a registered pension scheme in the tax year(s) from which you wish to carry forward. This doesn’t include the State Pension though. You also need to have earnings of at least the total amount you want to contribute. For example, if you want to contribute £100,000 using the carry forward rule, then you need earnings of at least £100,000 in the current tax year.


More on the HL SIPP, including how to top up and charges

What did you think of this article?

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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