Making top ups to your pension to keep your retirement goals on track

Posted 22.03.2022

Topping up your pension is one of the smartest ways to boost your income in retirement. The more you pay in, the more potential there is for you to achieve the retirement you want, when you want. You could also get tax relief on additional contributions, so it’s worth considering topping up your pension when you are able to do so.

Regardless of what stage in life you are at, planning for a long retirement is one of life’s priorities, especially as we are living much longer than previous generations on average. Investing in a pension and creating a financial plan is the best way to make the most of your retirement goals and opportunities.

Regular pension contributions

Try to review how much you regularly contribute to your pension each month, particularly if your earnings increase or your financial circumstances change.  If you have a workplace pension, see if your employer will also increase their contributions. Many will match your contributions if you pay in more.

Any contributions you make receive a substantial boost from tax relief. Tax relief adds 20% to your contribution. Higher-rate taxpayers can claim back additional tax on their self-assessment tax return.

Lump sum contributions

You can pay in one off lump sums at any time, but this is particularly relevant to do so before 5 April so that you can take advantage of your personal tax allowances. It may be worth considering using some of your annual work bonus if you receive one.

Increase your pension allowance using Carry forward

‘Carry Forward’ is a way that you can use up any remaining unused annual allowance for the previous three tax years. Including the current tax year allowance means that you can potentially pay up to £160,000 into your pensions.

Carry Forward can be a really useful way to catch up on your pension contributions, especially if you are self-employed, or perhaps received a bonus, or inheritance in a particular year.

How much can I pay into a pension?

There is no limit on how much you can pay into your pension each year, however there is a limit to the total amount of contributions you can pay into your pension to claim tax relief, this is set by your ‘Annual Allowance’.

Planning for retirement

Many people underestimate how much income they will actually need in retirement – and indeed whether they are investing enough to achieve the lifestyle they want.

A call or meeting with our financial advisors will help you calculate what you’ll need for retirement, according to the goals you want. We’ll ensure you understand how long your money will last to maintain the lifestyle you require, and how you can stay on track to meet your objectives.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.


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