How to boost your pension retirement fund as the state pension age is raised

All you need to know.

The state pension age has risen once again, meaning anyone born after October 5 1954 will now have to wait until they are 66 before they can claim the state benefit, while plans to raise the age again in the coming years could mean you have to wait even longer than that.

Subject to certain conditions – mainly based around your National Insurance Contributions – the new state pension rate is £175.20 a week.

But of course it’s never too early to start saving for your retirement, and there are other ways you can ensure your pension pot has more funds in it for when the time comes.

So just how can you boost your retirement fund?

How to boost your pension retirement fund

There are a number of ways you can ensure you have enough money to enjoy retirement – here’s what you need to know about your options.

Automatic Enrolment

One of the most surefire ways of making sure you have more money coming your way is via Automatic Enrolment – a Government initiative which makes it compulsory for employers to enrol eligible employees into the company pension scheme.

The scheme was phased in from the start of 2012, with the aim of having all eligible workers enrolled by 2018.

Your employer has to pay into this too – from April 2019 the minimum amount paid into the pension must be 8% of a person’s salary, with employees contributing 5% and at least 3% paid in by your employer.

Lizzy Holliday, Head of DC, Master Trusts & Lifetime Savings, Pensions and Lifetime Savings Association, told Metro.co.uk: ‘Ensuring people are putting enough aside for retirement is an important part of a saver’s financial journey.

‘Automatic enrolment has been the most successful pensions reform in a generation, however contribution levels are still too low. The Pensions and Lifetime Savings Association (PLSA) has called for AE contribution rates to rise to rise to 12% of salary by 2030, with a 50/50 split between employee and employer contributions.  Circumstances for some savers and employers are difficult right now, but it’s important to think about the future.’

‘To help savers on their journey, the PLSA launched its Retirement Living Standards last year. The Standards provide savers an easy-to-understand basket of goods that helps people picture the future – and relatable figures that can provide a powerful and practical tool for encouraging engagement with saving.

‘The PLSA looks forward to working closely with the pensions industry to ensure widespread adoption of the Retirement Living Standards to transform the way people think about saving for spending in later life.’

To be eligible for the scheme you need to be aged 22 or over, below state pension age, earn more than £10,000 a year and employed in the UK.

You can opt out if you are having financial troubles – although you’ll only be entitled to a refund on your money if you do so within a month of being placed on your employer’s scheme.

Having a personal pension plan

Even if you’re opted into a company workplace scheme, you can also save for the future with a personal pension plan.

The value of these will be dependent on the amount of contributions made, the period of time that each contribution has invested, the level of charges and investment growth over the period of savings made.

You can start drawing on this pension from an earlier age – usually once you turn 55, or earlier if you have to retire through ill-health – and up to 25% can be withdrawn as a lump sum, with the remainder used to provide you with an income in retirement.

There are no limits on the number of pension schemes you can have, although there are limits on how much you can contribute across all your plans annually, in order to receive tax relief on all contributions.

Defer your pension

One way you can make your pension go further is to delay your retirement age – although bear in mind this means you’ll need to keep working to reap the benefits.

Also it isn’t a guarantee of more money in the long run, as investments can fall as well as rise in value – although it’s potentially a good option if you’ve had the plan for a long time.

If you decide to do this, you’ll also need to speak to your pension provider to see if they’re likely to charge you for changing your retirement age.

Maximise your employer contributions

Ideally, you should pay as much as you can afford monthly into your workplace pension – and if you increase your contributions by an extra percentage or two, they will do the same.

If you want to increase your contributions then speak to your employer to find out how you can do it – and by how much.

Apply for pension credit

If you’re on a lower income, you may be able to get more money through applying for pension credits – a means-tested benefit which tops up your weekly income if it’s below £173.75 (or £265.20 for couples).

You may still be eligible for this even if you have a pension plan, savings or own your own home – you can find out more information about how to apply and eligibility at the Government’s website.

Other state benefits

If you’re not eligible for a basic state pension or you’re not getting the full amount, you may qualify for a ‘top-up’ of £80.45 per week through your spouse or civil partner’s National Insurance Contributions, if you’ve both reached state pension age.

You can potentially qualify for this if your spouse or civil partner reached State Pension age before 6 April 2016 and qualifies for some basic State Pension, even if they have not claimed it.

You could also be eligible if your spouse or civil partner reached State Pension age on or after 6 April 2016 and has at least one qualifying year of National Insurance contributions or credits from before 6 April 2016, even if they do not qualify for any new State Pension or they have not claimed it

If your spouse or civil partner was born before 6 April 1950, you will only be eligible for the top-up if you’re a woman married to a man, or married to a woman who legally changed their gender from male to female during your marriage

You can find out more information from the Pension Service.

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