So 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 also look at a simple example of how topping up your workplace pension plan could make a difference.
For example, if 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.
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 pension fund can go down as well as up so you might not get back the amount you put in.
There are various ways you can boost the benefits of your workplace pension plan (to find out more refer to the key features of your own workplace scheme).
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. They can help you understand if making changes to your plan, is right for you and fits with your aims and circumstances. They'll be responsible for the advice they give and you'll have protection from the Financial Ombudsman Service. If you don't have a financial adviser, you can find one here Find a Financial Adviser Near Me
Regardless of whether you’ve taken advice, you can refer any matter to the Financial Ombudsman Service for consideration should you feel that you haven't been treated fairly, or for any other aspect under the Financial Ombudsman Services remit.
This is for illustration only and is based on our current understanding of current tax legislation and HM Revenue & Customs practice, both of which may change without notice. The impact of taxation (and any tax relief) depends on your circumstances.
Our articles, guides and videos can help you learn more about saving in a pension and retirement planning.
Some employers already provide a company pension scheme as part of their employment package to help employees save for their retirement.