1.Get ahead of tax year end by making the most of tax relief
Tax relief makes your pension plan one of the most tax-efficient ways to save for your retirement. In a nutshell, taking advantage of tax relief means it may cost less than you think to pay more into your pension.
If you’re a 20% basic-rate taxpayer, every £100 that goes into your pension plan costs you just £80. Higher or additional-rate taxpayers can benefit from 40% or 45% tax relief, which means £100 into a pension plan can cost just £60 or £55.
Keep in mind that laws and tax rules may change in the future. Where you live in the UK and your own personal circumstances will have an impact on tax treatment.
For more information, listen to our two-minute explanation about the ‘magic’ of tax relief here.
2. Check how much you can pay in
Your annual allowance is the total that you, your employer and any third party can pay in across all your pension plans in a tax year. Any more than this and you could get a tax charge. Right now, the standard annual allowance is the lower of your annual earnings and £40,000 per tax year. Once you start taking money from a flexible modern pension, this may reduce to £4,000.
So if you’re still saving for retirement now could be a good time to think about paying in a little extra before the end of the tax year. If you have a Standard Life pension, you can top up through online servicing or through our app.
You must remember though that your pension is an investment - it can go down as well as up in value and you may get back less than was paid in.
The good news is that if you haven’t used all your pension allowances in the past, you can still claim for anything you haven’t fully used over the previous three tax years as well as the current one – and that can add up.
3. Look at what you have
It’s always a good idea to regularly check how your pension’s doing to make sure it’s still on track to meet your goals. So if you’ve been shying away from checking your pension value due to recent market volatility, now’s the time to bite the bullet.
Your pension value can indicate whether you’re saving enough to be able to fund the lifestyle you’d like in retirement, or if you need to make changes to get there.
If you’re not sure how much you’ll need in retirement, you can check the Retirement Living Standards, which aim to make it easier for you to understand just that. They show you what your retirement could look like at three different levels of income; minimum, moderate and comfortable.
If you have a Standard Life pension plan, you can check its value online by logging in.
4. Find out what you need
The internet is full of useful information that can help you with your savings. This includes online calculators and checklists, which are useful for showing you things like how much you could have in retirement, assessing your financial wellbeingand helping you assess how much risk you’re comfortable taking with your investments.
We have a host of online tools available on our website, including:
Our financial health check – find out how healthy your finances are and get some personalised tips on what you could improve on.
Our pension calculator – understand if you’re saving enough or if there’s a shortfall between what you have and what you want to have.
Our risk questionnaire– check how much risk you’re comfortable taking with your investments.
5. Invest in the right places for you
You should regularly check your investments to make sure they’re still right for you. You want to be comfortable that what you’re invested in is in line with your goals and your attitude to risk – which are likely to change at different points throughout your life.
It’s also generally a good idea to make sure you have a good mix of investments across different investment types and locations. This is known as diversification and it’s one of the best ways to help cushion yourself against the worst of market ups and downs during difficult times, although remember that the value of investments can go down as well as up and may be worth less than was paid in.
You may already be benefiting from diversification. For example, if you’re in the ‘default’ investment option of a workplace pension plan, this will generally include a broad mix of investments.
6. Don’t invest in the wrong places
It’s important to remember that if you come across any investment opportunities that seem too good to be true, they’re very likely to be a scam.
We’re aware of some fake websites currently circulating using the Standard Life logo and address. These aren’t genuine and if you invest in any of these products, you’re likely to lose your money.
Please visit our website for more information.
Always check with the Financial Conduct Authority (FCA) to see if a company or individual is authorised to provide investments and be very wary of high-pressure sales tactics and unregulated ‘opportunities’ – such as investing in diamonds, land, forests, and real estate, particularly overseas.
Read our guide on staying safe online during the Coronavirus pandemic for more helpful information.
7. Go digital
These days it’s easy to do all of these things and keep track of your pensions and savings online. As a Standard Life customer, registering for online services allows you to check how much your plan is worth, update personal information and maybe even switch where your pension money is invested.
If you have the Standard Life app on your phone or tablet, you can do a lot while you’re on the go too, including changing your pension payments and viewing how the funds you’re invested in are doing.