Topping-up your workplace pension

The great news is you’ve taken the first step, and are already a member of a workplace pension scheme.

This means you’re taking advantage of any contributions your employer makes into your plan. And the more you contribute (within limits), the more your employer might too – so it’s a win-win!

Long-term, this opportunity to receive increased employer contributions could really help shape your future retirement plans.

So it's worth having a conversation with your employer to understand their scheme rules about how much they'll contribute if you wish to top-up your regular payments. This may be up to a certain percentage of your salary.

Let's take a look at a simple example - you're a basic rate taxpayer over a 20 year period.

If you contribute £80 per month, £20 per month tax relief is added, totalling to £100 a month. This amounts to £24,000 invested. Assuming your employer matched contributions at £100 per month, this gives you a potential pot of £48,000.

So, over the period you've contributed £19,200; the taxman would have contributed £4,800; and your employer has contributed £24,000. The tax relief benefit is even better if you pay above basic rate tax (although only basic rate relief will be added into your pension pot).

In addition to this, the more you've paid into your workplace pension plan, the more you may receive in tax relief, subject to government limits.

This is for illustration only and is based on our current understanding of current tax legislation and HM Revenue & Customs practice. Tax rules can change and the impact of taxation (and any tax relief) depends on your circumstances.

You can also use this free workplace pension calculator to help see the effect of contributions into a workplace pension plan.

Please remember that the value of your plan can go down as well as up so you might not get back the amount you put in. This isn’t a real life example or a recommendation.

There are various ways you can boost the benefits of your workplace pension plan:

• Speak to your employer about topping up your workplace pension.

• Through an additional voluntary contributions (AVC) plan, although your employer may not match any contributions through this. This is an individual policy that aims to boost the benefits of your workplace scheme.

• You can set up an individual pension arrangement to supplement your company pension. 

If you’re thinking of making any changes or paying more money into your plan, it’s really important that you speak to a financial adviser. If you don't have a financial adviser, see our financial advice page.