Whether you’re currently unemployed, hunting or just starting a new job, it’s easy to forget the idea of a pension ticking over in the background. Saving for your retirement is vital for ensuring security in old age. While it might seem insignificant at the moment, it’s worth considering what options you have when it comes to saving for it and looking after it. Luckily, the pension experts at Portafina have created a list of crucial reasons why you shouldn’t lose sight of your pension.
You’ll be Automatically Enrolled
If you’re currently employed in the UK, over 22 years of age and earning over the threshold of £10k, then you will have automatically been enrolled on your workplace pension scheme. When you factor in your contributions, your employer’s and the tax relief you’ll receive as a bonus, it totals to 8% of your annual salary. There’s also no reason to stick to the minimum amount – adding more will only do more to boost your overall pension pot. By not even investing in the minimum, or not automatically enrolling yourself, you could be losing out in thousands of pounds to support yourself after employment.
As mentioned, tax relief is something you are entitled to, so ensure you are receiving the full amount. This is claimed back from the government by both employers and personal pension providers. If you’re enjoying a higher or additional tax rate, you may need to claim this back yourself via HMRC’s self-assessment form.
Advice Could Earn You Much More
Those who are receiving professional advice on their pension savings could be earning much more. Investing in a regulated financial adviser will help to assess whether you could be making more in a different pension scheme. Low interest rates and charges to your pension account could be eating away at your savings for later life, so this is well worth exploring. A service, such as one run by Portafina, will be qualified to make the most of your current savings. If this sounds like something you could benefit from, click here for more information.
There Is a Maximum Limit
If you’ve set yourself up to cash in large quantities of money to your pension, it’s worth noting that there is an upper limit on how much you can save. Your ‘pension annual allowance’ stops at £40,000 – and going over it incurs a charge. It includes everything from both you and your employer, but if you didn’t reach your limit at any time in the previous three years, then you can utilise any unused allowance and carry it over.
NI Gaps Cost Money
It’s not a wise idea to rely on the State Pension; it certainly won’t provide you with a bountiful retirement package. However, in order to ensure you receive the full amount at the very least, you will need to make sure that you are paying regular National Insurance contributions. You will need to have been doing this for 35 years at the very least, although not necessarily one year after the other. Any ‘gaps’ in your payments, or missed payments, could affect what you receive from the state when you retire. If you’d like a bit more information on this, then a financial advisor like Portafina could help you – just take a look at their Facebook page for contact information.
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