The more you save for your retirement, the more income you’ll have – so it makes sense to save as much as you can afford.
How to pay more into your pension
One of the best things about workplace pensions is that your workplace pays in too.
The minimum legal requirement for auto enrolment pensions is 8% of qualifying earnings. Workplaces must pay at least 3% of this, so you pay the remaining 5%. If your workplace pays more than 3%, you pay less. For example, if your workplace pays 4% of qualifying earnings, you pay 4%.
Qualifying earnings are all earnings between a lower and upper limit set by the government and reviewed each year. They include salary, wages, commission, bonuses, overtime, statutory sick pay and statutory parental leave pay (maternity, paternity and adoption pay).
Look for a match
Some workplaces offer ‘matching’ payments for your pension. This means they pay in more if you pay in more, up to a limit. That’s extra money, on top of your salary and your workplace’s standard payments, going towards your pension savings.
Ask your workplace if they do this. If the answer’s ‘yes’, it’s worth paying the highest amount they match. For example, if your workplace matches payments up to 6% of your salary and you can afford to pay in 6%, you’ll get a total of 12% going into your pension savings. And you’re only paying half of it.
It’s always worth paying more
It’s still worth paying more into your pension savings even if your workplace doesn’t match your extra payments. Even small amounts can build up over the years.
Remember the tax relief
If you’re a taxpayer, you don’t pay tax on money that goes into your pension savings. Instead, the income tax you would have paid goes into your pension savings. This is called tax relief.
If you wanted to, you could pay up to the whole of your salary into your pension in a tax year (April to April) and you’d still get tax relief, as long as the total going into your pension savings, from you and your workplace, was below the annual allowance.
Find out more about the annual allowance.
Paying more with now:pensions
If you’re currently paying in to a now:pensions account, it’s easy to change your payments in.
Log into now:u and go to Change your payments in > Pay in more.
Choose an extra amount to pay each time you get paid. This must be a percentage of your salary as a whole number.
Choose Confirm. Your extra payments will start going in to your pension savings at your next pay date.
Paying more with other pension providers
If you’re currently saving into another workplace pension, ask your workplace how you pay in more. Some pensions may call the extra payments ‘additional voluntary contributions’ or AVCs.
If you’re saving into a personal pension, check the rules for paying in more with your provider. And remember, you can pay into a personal pension at the same time as a workplace pension.
