Plan for a better retirement

Saving for a pension is like most other things – you’ll get better results if you spend some time planning. We’re here to help with top tips for checking and planning your pension savings to give yourself a better retirement. Your future self will thank you!

Check what you’ve already got

  • If you’re currently saving into a pension, check the most recent benefit statement your pension provider has sent you. If your pension provider offers an online service, you may be able to log in and get a more up-to-date value.
  • If you’ve got a workplace pension with NOW: Pensions, you can log in to your online account and look at your fund value summary. Or, look at your most recent benefit statement.
  • You’ll also need to check how much you’ve got in any other pensions you have and when you can access those benefits. Ask your providers for an up-to-date statement.
  • Use the government’s State Pension forecast service to get an estimate of your State Pension.

Think about how much you’ll need

As a starting point, the Retirement Living Standards suggest £10k a year as the minimum, £20k a year as moderate and £30k a year as a comfortable standard for a single person.

Remember, these amounts include State Pension, which you can only claim from State Pension age – so you’ll need to think about when you start taking the income from each of your pensions. Check your State Pension age.  

A quick guide to saving in an auto enrolment workplace pension

  • Your employer puts you into their pension scheme.
  • You pay contributions to build up pension savings.
  • Your employer pays contributions too.
  • If you pay tax, you get tax relief on your pension contributions.
  • Your pension savings are invested to help them grow.
  • At any time from age 55 onwards you can use the savings you’ve built up in the pension scheme to provide retirement benefits.
  • If you leave your employer, your pension savings will stay invested in the scheme unless you transfer them out. Charges will continue to be taken out of your pension savings.

Boosting your savings

  • Ask your employer if they do ‘matching’ contributions – they put in more if you put in more (up to a limit). If your employer does offer matching contributions (and you can afford it) think about increasing your contributions to get the highest match your employer offers.
  • You can also boost your savings by paying additional voluntary contributions (AVCs) – extra contributions you make on top of your standard contributions. Even a small amount can make a difference over time.

I’m over 50, is it too late to start a pension?

It’s never too late to save for a pension. Even at 50 or 55 you could have 10-15 years to go before you retire.

You’ll want to save as much as you can, so it’s worth checking whether your employer will match your contributions. And you’ll certainly want to consider paying AVCs.

Putting your pensions together

If you’ve got several pension pots in different places, putting some or all of them together could make managing your pension easier and save on charges. We don’t charge you to transfer into or out of our Scheme.

If you’ve got pension savings in our Scheme, you could transfer other pensions in to take advantage of our low management charges, as long as:

  • you’re an active member paying contributions
  • the Scheme can accept the transfer, and
  • the Scheme Trustee approves your transfer.

Or, you could transfer your Scheme pension savings out to another provider as long as:

  • you’re a deferred member, no longer paying contributions to the Scheme, and
  • the Scheme Trustee agrees you can transfer out.

It’s worth taking financial advice to help you decide whether combining your pensions is in your best interests, as there are a number of things you’ll need to take into account. These could include:

  • your personal circumstances
  • the amount in each pension
  • the rules and charges that apply to each pension.

See ‘Guidance and advice’ below.

Pensions and tax relief

Tax relief is one of the good things about pension saving. The income tax you would have paid gets added to your pension savings instead, as long as:

  • the combined contributions from you and your employer
  • to all the pensions you save into in a tax year
  • total £40,000 a year or less.

This includes your current workplace pension and any personal pensions you’re saving into. 

This is called the annual allowance. Stay within the annual allowance and you can contribute up to 100% of your salary to your pension savings in a tax year, and you’ll still get tax relief.

But, if you want to start taking your pension savings while you’re still paying into a pension, you need to watch out for the money purchase annual allowance. It reduces the combined amount you and your employer can pay into all your pensions, and still get tax relief, to £4,000 a year.

There’s more information about these allowances at gov.uk/tax-on-your-private-pension/annual-allowance.

Guidance and advice

The following organisations offer free, impartial information and guidance about pension savings.

Finding an independent financial adviser

MoneyHelper has a directory of independent financial advisers that specialise in retirement. Visit moneyhelper.org.uk/en/pensions-and-retirement/taking-your-pension/find-a-retirement-adviser or call 0800 138 7777.

The Personal Finance Society (PFS)’s What we do for the public section has a directory you can filter to find independent financial advisers that specialise in retirement. Visit thepfs.org/about-us/what-we-do/for-the-public.

You’ll need to check any adviser you want to use is on the Financial Conduct Authority’s register at fca.org.uk/firms/financial-services-register.

Read our blog on ‘Taking your benefits’ to find out what you can do with your pension savings when it’s time to retire.

NP/BO24

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