How to bolster your pension and enjoy a dream retirement

Half of Britain’s adults feel “uncomfortable” with the level of retirement savings they have, and 38% believe it’s unlikely that they’ll enjoy the lifestyle they want when they stop working. That’s according to a study featured in Professional Adviser, which also reported another worrying statistic.

Researchers found that despite widespread dissatisfaction about their retirement funds, just 11% of those questioned for the study had spoken to a financial adviser. It’s a sobering revelation, as it suggests that nearly 90% of Britons could be depriving themselves of the retirement they dream of simply because they haven’t sought the help of a professional adviser.

If you would like to boost your pension but don’t know how to, speaking with a financial adviser is likely to be a very wise decision. They could help you build your retirement fund to a level that could ensure you enjoy the standard of living you aspire to later in life.

So, with this in mind, read on to discover three powerful ways an adviser could help you to bolster your pension pot and look forward to your dream retirement. If you would like to learn more about planning for your retirement, please read our informative guide.

1. Increase your pension contributions

Pension contributions normally receive tax relief, which means that in 2023/24, every £100 placed into a scheme typically costs just:

  • £80 if you’re a basic-rate taxpayer
  • £60 If you’re a higher-rate taxpayer
  • £55 if you’re an additional-rate taxpayer.

This means that increasing your contributions could provide a significant boost to your pension pot and allow you to lift its value to where it needs to be much more quickly than you thought.  That said, always remember that while you can contribute any amount to your pension, the tax relief that’s available is normally limited to your Annual Allowance.

In 2023/24, the Annual Allowance is £60,000 or the amount you earn, whichever is the lower. If you’re a high earner, however, your allowance may drop to just £4,000 under the Tapered Annual Allowance rules.

If you’re a higher-rate or additional-rate taxpayer, you’ll need to claim some of your pension tax relief via self-assessment.

While filing your self-assessment in may feel like hard work, not doing so could be something you later regret. It could deprive your pension of a significant proportion of the tax relief it’s due, which in turn could reduce its growth potential over the long term.

A financial adviser can help you claim all of your pension tax rebate through self-assessment.

2. Find lost pension pots

According to the Telegraph in June 2023, the amount of lost or dormant UK pensions is estimated to be worth a staggering £37 billion. In addition to this, it reveals that The Department for Work and Pensions predicts that there could be 50 million dormant and lost pension pots in the UK by 2050.

If you have lost or dormant pensions, you could be losing out on money you’ve worked hard for that could help you to fund the lifestyle in retirement that you aspire to. One way of discovering pensions you may have forgotten about is by using the government’s Pension Tracing service. This is a free service that you can use to find contact details to search for a lost pension.

This is something a financial adviser could help you with, as they could help to track down pension pots you’ve forgotten about. Furthermore, an adviser can explain the options that might be available to you when you find them, which could include merging or consolidating them. Doing so may mean that your retirement fund is easier to manage and could help to reduce the charges associated with your pension pot.

In addition to this, it could improve your pension’s growth potential. Always remember that consolidating pensions carries risk, so always speak to a financial adviser before going ahead to ensure it’s the best option for you.

3. Use “carry forward” (if you can)

If you have a large lump sum of money, such as savings or an inheritance, you might want to place it into your pension to take advantage of the tax benefits this could offer. If you do, you may be able to exceed your Annual Allowance and still receive tax relief using “carry forward”, which utilises any unspent allowance from the previous three years.

This means you might be able to contribute up to £180,000 in 2023/24 and still enjoy tax relief. This could provide your pension pot or wider retirement fund with a major boost. As strict rules apply to carry forward, always speak to a financial adviser to ensure it’s right for you. If it’s not, you may become liable to an unexpected and potentially significant tax charge.

You may want to consider your other assets

While many people use pensions for the generous tax relief they provide, there are several other ways to build your retirement fund. These could include:

  • Stocks and Shares ISAs
  • Lifetime ISAs
  • Buy to let properties
  • Tax efficient investments.

Whether you have a pension or any of the above, the importance of understanding how to maximise growth so that you can enjoy the retirement you want cannot be overstated.

That’s why working with a financial adviser is likely to be a shrewd strategy, as they can help you understand how to maximise your retirement fund’s growth potential as tax efficiently as possible, while taking a level of risk that’s appropriate for you.

Get in touch

If you would like to discuss ways you might be able to boost your pension pots or retirement fund, please call 01527 577775 or speak to one of our advisers as we’d be happy to help.