Like many of my clients, it’s likely that your pension fund will provide the bulk of the money that you’ll live on once you’ve retired.

So, it makes sense that, as well as making regular contributions to your fund, you take every opportunity you have to boost its value.

In this article, you can read about eight of those potential opportunities. Not all of them may apply to you, but you should find at least some that you can make the most of to give your pension fund a real boost.

1. Ensure you claim higher-rate tax relief

Basic-rate tax relief is typically paid automatically on your pension contributions. So, for every £80 you pay into your fund the government add a further £20 – without you having to do anything.

Higher rates of tax relief are a different matter, however. If you pay Income Tax at the higher or additional rate, you’ll need to claim the extra relief back through your self-assessment tax return.

In Scotland, you can claim additional tax relief on your self-assessment tax return for money you put into a private pension of:

• 1% up to the amount of any income you have paid 21% tax on
• 21% up to the amount of any income you have paid 41% tax on
• 26% up to the amount of any income you have paid 46% tax on.

If you can, you should aim to do this as soon as you can at the start of a new tax year. The sooner you receive the money, the sooner you can invest it into your fund and start to benefit from potential investment growth.

Also remember that you can backdate claims for higher-rate relief for the last four tax years.

2. Use carry forward if you have a lump sum to invest

The maximum tax-efficient contribution you can make to your pension fund each year is either £40,000 gross, or 100% of your earnings.

But if you receive a lump sum – perhaps a bonus or an inheritance – you may exceed the £40,000 Annual Allowance by using a facility known as “carry forward”.

This allows you to bring forward any unused allowance from three previous tax years and boost the amount you can pay as a single contribution.

3. Make the most of your employer’s pension scheme

If you’re employed, take a look at the rules of the pension scheme at your workplace. While many employers will simply pay the minimum contribution they’re obliged to, others will agree to match the same percentage contributions you make up to a certain maximum.

So, make the most of the boost to your pension fund you could get from your employer – even if it means paying in more yourself.

4.  Ask your employer to pay into your existing plan rather than a workplace scheme

While you’re looking at the rules of your workplace pension, make a note of the charges that are being deducted.

One way to boost the value of your fund to is reduce the amount being taken in charges for investment and administration. The charges you could incur on a workplace scheme can be high, so you could give your fund a boost by paying contributions into a different plan of your own with lower charges.

If this is the case, it’s worth asking your employer if they will divert their contributions into your own personal scheme. They’re not obliged to, but there’s no harm in asking the question.

5. When you get a pay rise, give your pension a rise too

If you’re a member of an employer-sponsored scheme, your contributions will automatically increase each time your salary goes up.

If you’re not in an employer scheme, however, you’ll need to adjust your contributions yourself. Most providers now make this a straightforward process, so the administration shouldn’t be too onerous.

Likewise, if you start a new job on a higher salary, or if you’re self-employed and get a boost in your earnings, ensure that one of the first things you do is increase your pension contribution.

6. Make contributions for your spouse and partner

You’re allowed to contribute to a pension even if you don’t have any earnings. The maximum you can contribute is £2,880 net each year.

The big benefit of doing this is that you’ll get basic-rate tax relief on whatever you pay in. As you aren’t paying tax, this is effective free money from the government.

So, if you or your spouse or partner aren’t earning an income, it’s well worth taking advantage of this concession.

7. Consider investing even when you retire

Once you’ve stopped work and start taking income from your accrued pension, don’t make the mistake in thinking that your fund wouldn’t benefit from some attention.

If you’re still earning money – maybe in a part-time job or as a consultant – you can still make payments into your pension (and benefit from tax relief) even if you’ve started drawing flexibly from your fund.

The two key stipulations around this are:

• You’re limited to £4,000 gross contributions each year
• Contributions must come from your earnings.

Even if you’re no longer earning and therefore unable to contribute, you should still be looking to maximise your investment returns on your remaining fund. 

By putting together an effective income strategy you could benefit from long-term investment growth from the rest of your fund.

8. Check your State Pension entitlement

The current maximum State Pension is £9,339 a year. This is due to rise to £9,627 in April 2022.

Because the amount you receive is based on your National Insurance contributions (NICs), it’s worth checking to make sure you’ll be entitled to the maximum when you reach the State Pension Age.

The government has a website where you can obtain a State Pension forecast.

If you’re not currently projected to receive the maximum State Pension, you can make voluntary NICs to help boost the amount you’ll receive in retirement. This may not be suitable for everyone, so take advice from an expert first.

Get in touch

If you have any queries regarding any of the points raised in this article, do please get in touch.

You can email me at graeme@macfp.co.uk or call me on 01349 832849.