How To Get The Most Out Of Your Workplace Pension
The idea of planning far enough ahead for your pension is quite scary. Sometimes it reminds how quick live is going, and other times I wonder how early I’ll actually be able to retire. At this rate I’ll probably be in my 70’s! But having a pension is incredibly important. If you’re employed then it’s worthwhile making sure you get the most out of your workplace pension. Maximising the benefits can impact your financial security in retirement.
If you’re self employed here’s some more info on pension schemes available for you. But if you’re employed read on for info on how to get the most out of your workplace pension.
Understand your scheme
Before you can optimise your workplace pension, it’s essential to fully understand how your scheme works.
For most workplace pensions you’ll be on a defined contribution scheme. This means the contributions that you and your employer make are invested. Then the amount you receive in retirement depends on the performance of your investments.
Put in the maximum your employer matches
Employers usually match a contribution up to a certain percent. This can be anything from 4% to 10% (or even higher) and this will differ from employer to employer. If you don’t contribute the maximum matched amount then you’re missing out on free money.
When I changed job my employer match rate was 2% lower. So I had to contribute more just to come out with the same overall contribution, so it’s always worth working it out.
Get the most out of your workplace pension by increasing your contributions
This is a pretty simple one, but the more you put in the more you will get out of it. And even a small increase of a percent or two each month will add up over time thanks to compound interest.
Regularly review your contributions and adjust whenever you can. This is especially important if you get a pay rise (or change jobs) as it’s extra money you didn’t have before.
Take advantage of tax relief
Contributions to your workplace pension are typically made before tax is deducted. This means you receive tax relief on your contributions which is one of the main benefits. This can be especially useful if your salary brings you just over the threshold for a different tax band. Adding more to your pension may mean you don’t pay the extra tax on your salary.
Be aware of the annual allowance limits for tax relief and make sure you don’t exceed them.
Understand pension transfers and consolidations
If you change jobs you may have the option to transfer your existing pension pot into your new employer’s scheme (or into a personal pension). Before you make a decision, ensure you understand the implications of doing so. There may be fees involved, or you may lose some benefits. In some cases it may be beneficial to consolidate them for easier management. Other times it may be better to leave them where they are.
If you want to know more about whether you should consolidate your pensions read this post.
Get the most out of your workplace pension by reviewing investment choices
When you’re auto-enrolled you’ll be placed on a particular scheme, but in most cases there will be different options. You may be able to choose a different investment risk, or change to a green investment.
If you’re unsure about the choices available or making investment decisions consult a financial advisor.
Check for additional benefits
Some workplace pension schemes offer additional benefits such as life insurance, disability cover, or investment advice. Review your scheme’s benefits and take full advantage of any additional services provided. These can add substantial value to your overall pension package.
Keep track of your pension statements
Each year you’ll get a pension statement to show it’s performance and current value. Keeping track and reviewing them as they arrive will help you monitor it’s growth and stay informed of what’s going on.
You’ll then be able to compare how the value is increasing year-on-year.
18 responses to “How To Get The Most Out Of Your Workplace Pension”
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These are amazing tips. I had no idea you could ask for Tax relief, this is perfect. I will check with my accountant if she’s already doing that.
I wish I could afford to get myself a private pension. I think if you do have one, it’s important to always check your statements
I know here in the States, it’s super important to put as much into your pension as you can because a lot of companies will either match it fully or match a percentage.
Wow match it fully would be amazing x
Anyone with a pension needs to read this and bookmark it. IT’s so important to do everything you can to bolster that nest egg!
Pensions were something that I hadn’t taken much notice of when I was younger. I have a pension as part of my part-time job which the employer and myself contribute to. It is such an important thing to have in place!
Same, I didn’t have as much education when I started earning x
Getting the most out of workplace pension is very important for people who are employed with an organization/company. Thanks for these practical tips.
This is a very important topic. I helped my father keep up with his pension statement and we always where able to find more benefits.
Having a system where your employeer matches your contributions can be so good! Thank you for all of these tips.
These are some great pension tips. I agree you have to make sure you are implementing these tips and make sure you are checking to see if your employer is matching your contributions as well and always keep track, it really makes a difference.
I haven’t thought much about pensions and their benefits, but having an employer match your contributions is a great perk.
Yeah it really is, definitely something to look into x
These are some helpful tips you shared. I am not sure whether what’s with my pension thing as I am a freelancer. Need to check with my current employer about it more.
Yeah there will probably be something totally different to look into if you’re self employed x
None of the companies I ever worked for had actual pensions…. I would get a 401K match but nothing like a good pension with the state and government jobs. I wish I had known more about pensions and such when I was younger and deciding on a career path. I would have chosen something that would give me a pension for retirement years for sure. That is serious peace of mind.
Yeah I don’t think it’s a topic that was as commonly talked about even 15 years ago when I was first in ‘real’ jobs x
Lots of talks at my friends workplace about pensions and she hasn’t a clue so will definitely show her this