Many people in the UK face a low level of retirement income – for many, lower than they would like. Therefore it is important to review your pension planning while you are still working to check that it is on target to provide the retirement income that you will need when you eventually retire.
There are a number of ways that you can boost an occupational pension. One is to start drawing your pension later, which is likely to increase the monthly income.
You could also pay extra contributions alongside the pension fund and boost it this way. This is known as an additional voluntary contribution scheme (AVC), can be set up over a period of time, and is measured either in years or by lump sum payments.
Alternatively, you can take a salary sacrifice, if your employer offers it, which diverts part of your pay into pension contributions and has tax and national insurance advantages.
However, you do not have to use a company pension scheme to increase the size of your pension pot, you can start a personal pension or a stakeholder pension plan whenever you like.
The manner in which you invest within pension plans can create more risk and higher returns than others, so if you are not confident in weighing up the equation of risk vs return, you should take financial advice from a qualified, experienced advisor.
A personal pension plan may perform much better than your existing pension plan and also has the advantage in spreading risk because not all your eggs are in the same basket!
Of course, you do not have to use just a pension plan to fund for your retirement…you can invest in Individual Savings accounts (ISAs), or general investments such as investment trust, unit trusts or property.
ISAs are a popular addition to your plans, as they are flexible and the money can be withdrawn at anytime unlike a pension fund. With an ISA, you can save up to £10,200 per year, with funds growing tax free and any future withdrawals allowed without income tax or capital gains tax. However if you already invest up to the annual limit, you may wish to look at unit trusts or other investments although you will not receive the same tax benefits.
Whatever your circumstances, always take professional independent financial advice before you come to any decisions. That way you will find the best way to boost your pension and make the most of your retirement income.