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21 ways to boost your pension in 2021

Find out how to give your retirement savings a helping hand this year

21 ways to boost your pension in 2021

When you’ve got bills and other financial commitments to deal with, saving for retirement can easily end up taking a backseat. But it’s never too late to give your pension pot a boost.

There are some simple things you can do to ramp up your savings without your bank balance taking a hit.

Whether you’ve just started saving into pension or are looking to retire soon, here are 21 ways to boost your pension in the new year.


1. Increase your contributions

If you’re in a defined contribution workplace pension, there are minimum contributions you and your employer must pay. Since April 2019, total minimum contributions have stood at 8%; with a minimum of 5% paid by you and 3% by your employer.

These contributions are calculated based on your ‘qualifying earnings’, which are set between £6,240 and £50,000 a year. 

Some employers match your contributions. So if you can increase them, even just by 1%, it could make a huge difference to your overall pot – especially if you start early. 

2. Use windfalls wisely

You can pay a lump sum into your pension as well as regular contributions. If you have a windfall, think about paying this money into your pension to help you reach your retirement goals. 

The sooner you can invest your lump sum the more time it will have to grow.

As with all pension contributions, you’ll benefit from tax relief up to a total of £40,000 a year. 

3. Delay taking your pension

You can generally access money in a defined contribution pension when you reach 55, but waiting for longer allows more time for you to make additional contributions to your pot and more time for the investments to grow.

If you’re thinking about deferring your pension, check with your provider to see if there could be any charges for changing your retirement date.

4. Consolidate your pensions

On average, we’ll build up 11 different pension pots over our working lives, making it tricky to keep track of our savings.

Combining your savings into a single pension will not only make it easier to manage, but you could reduce the charges you’re paying as well.

But there are potential drawbacks – some schemes charge exit penalties, for example – so make sure you do your research first.

5. Track down lost pots

If you’ve lost track of a pension you had with a previous employer, you can use the government’s Pension Tracing Service, which has a register of all workplace schemes.

This will give you the name and contact details of the provider of your employer’s scheme, so you can contact them directly.

Keeping tabs on multiple pension pots should become easier with the introduction of the ‘pensions dashboard’ – an online tool designed to show all of your pensions data in one place. The launch of the service has been delayed until 2023.

6. Make sure you get full pension tax relief

The government boosts your pension contributions via pension tax relief. This means that money you would have paid in tax on your earnings goes towards your retirement savings instead.

The rate of tax relief you get depends on the amount of income tax you pay, so you could get 20%, 40% or 45% depending on how much you earn.

The way tax relief is claimed depends on the type of pension you’re saving into, and you might need to do some extra legwork to get the full tax relief you’re entitled to.

7. Carry forward your unused annual allowance

You can get tax relief on pension contributions up to a maximum of £40,000 a year, or 100% of your earnings, whichever is lower. This is known as the annual allowance.

Carry forward is a process that allows you to make use of any unused annual allowance from the past three tax years.

8. See if your spouse can boost your savings

If you’re married, your spouse could pay into your pension.

But you don’t have to be married or in a civil partnership for one person to pay into the other’s pension. Anyone can set up a pension and pay into it for someone else.

9. Set a savings target

Are you on track for the lifestyle you want in retirement? It can be hard to gauge how much you’ll need, so we’ve spoken to thousands of retired Which? members to see where their money is being spent.

Our analysis found that couples need an average income of £17,000 a year to cover spending on essentials, such as groceries and bills.

The figure rises to £25,000 when including more spending on leisure activities, and up to £40,000 a year after tax to incorporate long-haul holidays and a regular new car.

To produce the ‘comfortable’ retirement target of £25,000 a year, couples relying on income from a defined contribution pension (plus the state pension) would need a pot of around £169,000 if opting for pension drawdown (assuming growth of 3% a year).

10. Keep track of your investments

Your pension contributions are invested by your scheme provider. If you don’t choose your fund, your provider will choose a ‘default’.

Your pension statement should tell you which funds your pension is invested in.

Don’t be afraid to speak to your provider about switching investments if yours have been underperforming.

If you do decide to switch funds, always remember that there’s no guarantee the new one will perform better than the old one.

11. Consider paying for expert help

If you can afford it, it’s well worth speaking to an independent financial adviser (IFA) to help you maximise your retirement income.

IFAs are authorised to give advice and recommend suitable pension products and investment options.

Many advisers will offer ongoing reviews to ensure your finances stay on track for and throughout retirement.

12. Get free pension guidance

If you can’t afford financial advice or don’t want to pay for it, you can also get free, impartial guidance from the Pensions Advisory Service.

While it can’t give you regulated financial advice, an expert can talk you through your options.

You can contact the Pensions Advisory Service on 0800 011 3797 or visit its website.

13. Delay taking a lump sum

Everyone is entitled to take 25% of their private or workplace pension tax-free from the age of 55.

But the longer you wait to take money out of your pension pot, the longer it has to grow.

Find out more in our guide to taking a pension lump sum.

14. Redirect regular payments

Try paying more into your pension whenever a regular financial commitment comes to an end – for example, if you pay off a loan or credit card, you could redirect this money to your pension instead.

Even small increases like this can make a big difference over the long term.

15. Check your state pension

You can claim state pension when you reach state pension age. This is currently 66, but is scheduled to rise to 67 between 2026 and 2028. 

To find out how the state pension will supplement your private pension savings, get your state pension forecast at gov.uk, which will tell you how much you’re likely to receive.

Find out your retirement age using our state pension age calculator.

16. Defer taking your state pension 

You don’t have to start taking the state pension as soon as you reach the qualifying age – you can delay payments in return for a slightly higher amount.

How much you get depends on when you reached state pension age:

If you reached state pension age before 6 April 2016

For every five weeks you defer, you’ll get a pension increase of 1%. This works out at 10.4% for every full year. The basic state pension is £134.25 a week in 2020/21, or £6,981 a year. Deferring for a year will see you increase your annual state pension to £148.21 a week, or £7,707.02.

If you reached state pension age after 6 April 2016

The rate of annual increase is 5.8%, making the offer less attractive. This partly reflects the new state pension, which is higher than the basic state pension.

The new state pension is £175.20 a week in 2020-21 or £9,110.40 a year. Deferring for a year will see you increase your annual state pension to £185.36 a week or £9,638.80 a year.

17. Top up your state pension

You need 35 years’ worth of National Insurance contributions (NICs) to get the full state pension and 10 years to get anything at all.

If there were years where you didn’t get enough National Insurance credits to give you a ‘qualifying year’, you may find you have a gap on your National Insurance record.

You can top up your record by making Voluntary ‘Class 3’ NICs. The cost of filling gaps from the 2019-20 tax year is £15 a week.

Usually, you can only pay gaps in your record from the past six years – but depending on your age, you may be able to fill gaps from even further back.

18. Consider working for longer

There’s no obligation to stop working after you reach state pension age. Continuing to work either full time or part time will allow you to carry on making contributions to your pension and boost your retirement savings.

Find out more in our guide to working beyond retirement age.

19. Check if you’re eligible for pension credit

Pension credit tops up your pension if you’re on a low income. It’s made up of two parts:

  • Guarantee credit Tops up your weekly income so it reaches a minimum sum set by the government.
  • Savings credit An extra payment from the government to reward you for saving for retirement.

Find out more: how to claim pension credit

20. Watch out for pension scams

More than £30m has been lost to pension scammers since 2017, according to the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR).

You should always be suspicious if anyone calls you out of the blue to offer you a money-making deal.

It’s now illegal for pension companies to cold call you, but that doesn’t stop scammers from trying their luck – for example, by offering you a ‘free pension review’ or ‘early access’ to your retirement savings.

21. Track down other savings

You may have savings or investments held elsewhere that you can use to top up your retirement income.

If you think you’ve lost track of any of your savings over the years, see if you can trace them using My Lost Account.

This is a free service bringing together the three tracing schemes of UK Finance, the Building Societies Association and National Savings and Investments (NS&I) into a single website.


This article was originally published on 3 January 2021 but has since been updated. In the first version tip number seven read ‘carry forward tax relief’ but on 18 January 2021 we updated to ‘carry forward unused annual allowance’.

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