When you pay into your pension, so does the tax man
Every time you contribute to your pension, HMRC will top it up based on your marginal tax rate. This example is based on the current basic rate of 20%. This is effectively free money and the higher your tax band, the more you will benefit.
So, the more you pay into your pension, the more top ups you receive. Add to this the power of compound interest and you can see the impact higher pension contributions could have on you retirement plans.1
Size of pension at 65: £174,064
Contribute an extra £50 a month
Size of pension at 65 is now: £203,840
Why your workplace pension means double bubble
When you pay into a workplace pension it’s topped up by your employer as well as HMRC. This is effectively two extra helpings of free money, which is why it makes sense to make sure you are getting the most out of your workplace pension before contributing extra to your personal pension.
Paying into your Pension Egg scheme
When we check your pension we’ll show you the kind of difference increasing your contributions could have on your annual income in retirement.
Love your pension sunny side up…
Contributions are one of the big four things to consider when it comes to increasing the size of your pension. The other three are:
Take a 40-year-old with a £50,000 pot growing at 5%, on average, each year with annual charges of 1.2%. The graph shows how much their pension would be worth aged 60 if they did nothing, compared with tackling contributions, performance and charges (compounded). We also show the impact of keeping your savings invested for a further five years.
Check your pension for free
1This is based on a 50,000 sum at 40, invested for 25 years with a 5% annual return, contributing £0 per month and then £50 per month. No other charges considered.