Brits have been supplied some recent advice on pension contributions, with an professional dispelling one common “myth” about the system. Consumer professional and journalist Martyn James addressed issues that some people think they can’t change their office pension contributions. He said this was a delusion as people can pay more than the 4% minimal either by growing the proportion or by paying a lump sum.
He wrote for the Mirror: “This is positively a delusion! You can pay more than the minimal quantity of 4% of your wage by growing the proportion you pay month-to-month or paying a lump sum into your pension. You might think your outgoings are too tight for lump sum funds, but if you get a bonus, why not take into account including that to the pension?”
Martyn also suggested staff to discover out whether their employer matches the elevated pension contributions, as some do.
He said: “It’s also value asking if your employer matches any additional money you pay into your pension. Some will do this, pound for pound, up to a certain restrict.
“If your employer does this up to, say, 8% of your wage, and you elevated the quantity going into your pension from 4% to 6% of your wage, then your employer would also pay in 6%. Extra money going straight towards your retirement – joyful days!”
In most automatic enrolment schemes, you’ll make contributions based on your total earnings between £6,240 and £50,270 a year before tax.
You can also get tax relief on private pension contributions worth up to 100% of your annual earnings.
This either happens automatically, or you’ll have to claim it yourself, depending on the type of pension scheme you’re in and the rate of Income Tax you pay.
You will automatically get relief if your employer takes workplace pension contributions out of your pay before deducting Income Tax, or your pension provider claims tax relief from the Government at the basic 20% rate and adds it to your pension pot.
It’s up to you to make sure you’re not getting tax relief on pension contributions worth more than 100% of your annual earnings, as HMRC can ask you to pay back anything over this restrict.
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