Six tips to help boost your pension savings before the end of the tax year 2022/23

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Kirsty Kerr

March 17, 2023

4 mins read

The last day of the tax year is coming up on 5 April, and there’s still lots you can do to make the most of your pension plan before then. So here are our top tips to help you give your pension plan a boost before the tax year is up.

1. Use your pension annual allowance

Your pension annual allowance is the total amount you, your employer and any third party can pay into your pension plans in a tax year before a tax charge could apply. The limit is currently £40,000 or 100% of your earnings in a tax year, whichever is lower. But it could be less if you’re a higher or non-earner or if you’ve already started taking money from your pension savings. You can find out more about how the pension annual allowance currently works in our guide.

Once the new tax year starts, your annual allowance will renew. If you can afford to do so, it makes sense to consider paying more into your pension plan before then to make the most of this year’s allowance.

If you’ve already used all of your annual allowance for the 2022/23 tax year, don’t worry – you might still have options. If the £40,000 annual allowance limit applies to you and your circumstances allow for it, you can usually carry forward any unused allowances from the last three tax years.

To find out about changes that will affect pension allowances – including the pension annual allowance – in the new tax year, read our Spring Budget article.

2. Top up your pension payments with tax relief

Tax relief makes your pension plan one of the most tax-efficient ways to save for your retirement. In a nutshell, this means your payments into your plan get topped up by the government, effectively making it cheaper to save more into your plan. 

Not all pension schemes provide tax relief in the same way. But most UK taxpayers get tax relief on their own pension payments based on the rate of income tax they pay. This means most UK taxpayers will get a 20% top-up from the government on their pension payments, so it’ll only cost you £80 to pay £100 into your pension plan. The benefits are usually even more for higher or additional-rate taxpayers. But you’ll need to claim anything above 20% back from the government depending on how your payments into your plan are being made.

Some workplace pension schemes offer tax benefits in a different way (salary sacrifice or salary exchange schemes, for example). So do check with your employer how this works for you if you’re not sure.

You can find out how pension tax relief works and how to make the most of it by reading our article.

Paying a little more into your pension plan could make a big difference and help give it an extra boost. If you have a Standard Life personal pension plan and want to pay in a bit more each month or make a one-off payment, you can do this by logging in or registering for online services. Have a workplace pension plan with us? The way in which you can pay more into your plan is slightly different – but just as quick and easy. To find out how, speak to your employer.

Remember, a pension is an investment. Its value can go down as well as up and it could be worth less than was paid in.

3. Take advantage of your workplace pension plan

Workplace pension plans are a great way to save more for your future because your employer normally has to pay in too. At least 8% of your qualifying earnings will be paid in, and a minimum of 3% of that will come from your employer. 

Some employers will even match the percentage you’re paying into your plan up to a certain amount. So it’s worth checking to see if upping your own payments could mean your employer will pay in more too.

4. Consider bonus sacrifice

If you get a work bonus, you might have the option to put some or all of it into your pension plan. Doing this could save on tax and National Insurance deductions, meaning you get to keep more of your bonus in the long run. And it could be a good way to make the most of your current pension annual allowance before 5 April.

You can read all about the benefits of doing this in our bonus sacrifice article.

5. Get your tax-free personal allowance

Most people get a tax-free personal allowance, which is £12,570 for the 2022/23 tax year. When your taxable income reaches £100,000, your personal allowance is cut by £1 for every £2 of your income. Currently, you lose the personal allowance once your income reaches over £125,000.

You may be able to recover any loss to your personal allowance by reducing your income through paying into your pension plan. That way, you’re making tax savings and putting money towards your future at the same time.

6. Get your child benefit back by paying more into your pension plan

Worth a little over £2,600 a year to a three-child family, child benefit is reduced by the High Income Child Benefit Charge when one parent’s income reaches £50,000. At £60,000, the tax charge cancels out the benefit entirely. But there is a way you could get some or all of it back if your earnings are in this range.

Paying into your pension plan reduces what counts as your income. And it could allow you to keep your child benefit and boost your pension savings at the same time.

Use the government’s child benefit tax calculator to work out if you’re affected by the tax and how.

You can choose not to take child benefit payments if your earnings are over £60,000, but you should still consider filling in the child benefit claim form. This helps you get National Insurance credits, which go towards your State Pension later in life.

Preparing for tax year end

To make the most of all the benefits your pension plan has to offer, you could consider paying in more if your budget allows for it. This could mean making a one-off payment before the end of the tax year to get closer to meeting your pension annual allowance. Or it could mean putting a little more into your pension plan each month. It can all add up and could really help give your pension savings a boost over time. Everyone’s circumstances are different, though, and you’ll need to think about whether this is right for you.

Your own personal circumstances, including where you live in the UK will have an impact on the tax you pay. Laws and tax rules may change in the future.

You can manage and review the payments you make into your Standard Life personal pension plan by logging in or registering for online services. And remember, if you have a workplace pension plan with us, the process is slightly different so do get in touch with your employer.

For more tips on how to make the most of your pension benefits before tax year end, watch our three-minute video.

A pension is an investment and its value can go down as well as up and may be worth less than was paid in.

The information here is based on our understanding in March 2023 and shouldn’t be taken as financial advice.

Standard Life accepts no responsibility for information in external websites. These are provided for general information.

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