The expert said saving a small amount can make a big difference (stock photo) (Image: Getty)
A pensions expert has revealed how much people could save by upping their contributions from an early age. According to Which? pensions expert Holly Lanyon, even modest sums can offer substantial results if you ‘start early’.
She was featured in a clip posted on @Whichuk’s official TikTok account. In the post, the expert broke down precisely how much people stand to gain by getting started in their twenties. The video caption said: “Three simple ways you can boost your pension.”
In the footage, Holly explained: “Here are three ways you can boost your pension. Increasing your contributions, even by a small amount, can make a big difference over time, especially if you start early.
“Just to give you an idea, if you were earning £25,000 and you increased your contributions from the minimum of 5% of your salary to 7% from the age of 22, you could end up with a pot worth an extra £52,000.”
She went on: “Adjusted for inflation, by the age of 68, this rises to an extra £79,000 if you contribute 8%. Some employers will even match your contributions, which will further boost your pot.”
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Holly also advised viewers to ensure they get every pound they are entitled to, reports the Mirror. She said: “Basic rate taxpayers usually get tax relief added to their pension contributions automatically.
“So if you wanted to top up your pension by £100, you’d only need to pay in £80 as the government would add £20. If you’re a higher or additional rate taxpayer, you may need to proactively claim the extra tax relief you’re entitled to by heading to the HMRC website.”
Holly concluded: “Sacrificing a part of your salary isn’t about rituals, offerings or spells. It’s a brilliant way to boost your pension pot and reduce the National Insurance you have to pay.
@whichuk Three simple pension changes could make a major difference to your retirement savings. It might be tempting to cut or stop payments if money gets tight, but this could end up costing you in the long run. Better still, if you can afford to make extra contributions from time to time – for example, after receiving a bonus – it could significantly boost your pension over the long term. #pension #savings #retirement #retirementplanning #retire ♬ original sound – Which?
“There’s currently no limit on the amount that you can pay into your pension using salary sacrifice, but from April 2029, an annual cap of £2,000 will apply. You’ll still be able to pay more than this into your pension, but contributions above the cap will no longer be exempt from National Insurance.”
Which? reiterated the benefits in the video’s caption. It said: “Three simple pension changes could make a major difference to your retirement savings. It might be tempting to cut or stop payments if money gets tight, but this could end up costing you in the long run.
“Better still, if you can afford to make extra contributions from time to time – for example, after receiving a bonus – it could significantly boost your pension over the long term.”
Gov.uk offers advice for anyone planning their retirement income. The webpage covers choosing between a personal or stakeholder pension, planning your savings, and choosing how you want to get your retirement income.
