Matched pension contributions could DOUBLE your pot, so check if your employer offers them

Some employers adjust your pension premium if you pay more than the absolute minimum yourself.

If you can afford this, it’s worth looking into throwing extra money into your fund for free.

Auto-enrollment forced all employers to set up and pay for pension plans for their staff, but many contribute far above the required level to attract and retain staff.

Generosity varies by industry, but employers matching pension contributions of up to 5 per cent of salary isn’t uncommon – see below to find out how that can boost your pot from £150,000 to £188,000.

For example, those who work in financial services may find that their employer is willing to match up to 8 percent of salary.

That could increase your fund to £300,000, according to Hargreaves Lansdown calculations – see below.

‘An employer match – where your employer invests more than you do – is a great way to get the most out of your pension and benefit from free money.’ says Helen Morrissey, head of pension analysis at Hargreaves.

“If budgets are still too tight, check if your employer offers it and make a note to get the most out of this extra cash as soon as possible.”

Figures based on someone saving from age 22 on a salary of £25,000, retiring at age 67 with an annual investment growth rate of 5% and an annual allowance of 1.5%. Employee contribution numbers include the free tax credit you get from the government, not just your own money

Rising household bills mean that many people are cutting or stopping pension payments, prompting warnings about the damage this is doing to chances of a decent retirement.

Not saving for retirement for five years in your 20s could blow a £114,000 hole in your final pension pot, and if you don’t pay for 10 years, you’ll lose a whopping £202,000, according to a recent study.

But if you can still afford to pay more, then not only might you get more free money from your employer, but you’ll also get additional tax credits from the government for making higher deposits into your pot.

Everyone saves for retirement from untaxed income because the government pays pension tax relief at the rate of 20 percent, 40 percent, or 45 percent income tax.

So it can be beneficial to transfer savings into your retirement to get this extra free money from the employer and government, rather than putting it in an Isa cash account or any other account – although it means you until your retirement locks up instead of you being ready. access to your money.

When checking with your employer about matched contributions, don’t just ask about the percentage they put in, but whether it’s based on your total pay or just a portion of your earnings.

With automatic enrollment, the minimum employer contribution of 3 per cent is only payable on a £6,240 – £50,270 portion of your annual income.

Who pays what: automatic breakdown of minimum pension contributions

Morrissey says: ‘Many employers stick to their auto-enrollment minimums when it comes to workplace pensions, but having an employer willing to go above and beyond can have a huge impact on how much you end up getting in retirement.

“In times like these it’s hard to find extra money because budgets are getting tighter and tighter.

‘However, if you can save a little more, it is worth checking whether your employer offers such a scheme, because then you can get a lot of extra pension for little extra.’

Employer contributions to pensions are much lower in the private sector, where defined contribution pensions predominate, than in the public sector, where salary-related schemes dominate.

Both career average pension schemes, which are generally offered to new entrants, and the old style ‘final salary’ schemes are much more generous.

While they tend to charge much higher minimum contributions from staff, they are generally much more favorable.

You will receive a lifelong guaranteed pension and will continue to pay something to your partner if they outlive you.