Almost everyone in an employed role will be provided with a workplace pension. Many of us pay little attention to it, but taking an interest now could add thousands to your retirement fund.
This article will provide three ways to help you boost your workplace pension
Employer contributions into your workplace pension
If you are employed, chances are you have a workplace pension which your employer pays in to and you do too. Some employers offer the ability to match pension contributions, up to a limit. For example, if you pay in 10% they may also pay a further 10% of salary into your pension pot. For someone on a salary of £50,000 this could result in a further £5,000 per annum! Assuming that £5,000 grew at 5% for 30 years, that could result in a further £350,000 in your pension pot. That could be lifechanging in retirement.
If your workplace pension operates on a “salary sacrifice” arrangement, there is a possibility that reducing your salary may reduce some of your other workplace benefits, such as death in service. It could also mean that mortgage lenders will loan you a slightly reduced figure, so keep this in mind if you are close to purchasing a property or are under insured from a life assurance perspective.
You can calculate how much difference extra contributions could make here Compound Interest Calculator – Daily, Monthly, Yearly Compounding (thecalculatorsite.com)
National insurance savings
Some employers offer to pay any national insurance they save by paying you pension contributions instead of a salary. If your employer pays 15.05% national insurance on your salary and agrees to pay this into your pension, you could receive a further £150 for every £1,000 of salary you sacrifice. It is worth checking if your employer will do this.
Investment options for your workplace pension
When you first opened your workplace pension chances are you were placed into a “default fund” or you ticked a box for what risk you would like to take and your pension scheme placed you into an investment fund which matched your on paper attitude to risk. It’s worth looking under the bonnet of the fund to ascertain how much it costs, where the investments are located geographically and where the money is invested. You could be leaving returns on the table by being in a sub optimal fund.
So there you have it, three ways to boost your workplace pension savings. There are a number of other things you can do to increase your workplace pension pot efficacy. We will discuss these in future blogs.
If you are confused by your workplace pension options and would like local independent pension advice, please get in touch via the details below. The first meeting is always on us.
T: 01268 944122
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