Let’s be honest – thinking about your pension isn’t exactly exciting, is it? But here’s the thing – the decisions you make today could be the difference between a retirement filled with worry or one where you can actually enjoy yourself
I’ve been researching pension strategies for years, and I’m gonna share some practical ways you can increase your pension pot without needing a finance degree. These tips work whether you’re just starting your career or retirement is on the horizon.
Why You Should Care About Your Pension (Like, Right Now)
Before diving into the strategies, let me tell ya why this matters. According to recent studies, most people are simply not saving enough for retirement. The gap between what people have saved and what they’ll actually need is growing.
I remember talking to my friend Sarah last month. She’s 58 and panicking because she only started thinking seriously about her pension five years ago. “I wish someone had shaken me in my 30s,” she told me. Don’t be Sarah!
1. Start Saving Early (Like, Yesterday)
This might seem obvious, but it’s THE most powerful way to boost your pension. The earlier you begin, the more time your money has to grow.
Here’s why this works compounding. This magical financial concept means you earn returns not just on your original investment, but also on the returns themselves Over decades, this creates a snowball effect.
For example, if you start saving £200 monthly at age 25 you could build a significantly larger pension than someone who starts saving £400 monthly at age 45. Time is literally money here.
What you can do right now: If you haven’t started a pension yet, set one up this week. Even small contributions matter when time is on your side.
2. Save More (Even Small Increases Make a Difference)
Increasing your pension contributions, even by small amounts, can have a dramatic impact on your final pot.
Let’s look at the numbers:
- A basic-rate taxpayer saving £200 monthly into their pension (which becomes £250 with tax relief) could have over £370,000 after 40 years (assuming 5% annual returns).
- But increase that to £250 monthly (£313 with tax relief), and the pot grows to over £460,000.
That’s an extra £90,000 from just £50 more per month! Pretty crazy, right?
What you can do right now: Try increasing your monthly contribution by just 1-2% of your salary. You’ll barely notice the difference in your paycheck, but your future self will thank you.
3. Maximize Your Employer’s Contributions
If you’re employed, your employer likely contributes to your pension too. This is basically free money!
Many employers will match your contributions up to a certain percentage. Some will even increase their contributions if you increase yours. I’ve seen some generous employers willing to put in up to 10% of salary if the employee contributes enough.
What you can do right now: Talk to your HR department to understand exactly what your employer offers. Make sure you’re contributing at least enough to get the maximum employer match.
4. Track Down Lost Pensions
This one surprises a lot of people. Did you know there’s an estimated £26.6 billion in unclaimed pension pots in the UK as of 2022? That’s BILLIONS just sitting there waiting for people to claim it.
If you’ve worked for different employers throughout your career, you might have old pension pots you’ve forgotten about.
What you can do right now: Use the government’s free pension tracing service to find any lost pensions. It might take a few hours, but it could be worth thousands.
5. Consider Consolidating Your Pensions
Once you’ve tracked down all your pensions, it might make sense to bring them together in one place. This makes them easier to manage and could save you money on fees.
However, be careful! Some older pensions have valuable benefits that you might lose if you transfer them. Always check before moving anything.
What you can do right now: Review your pension statements and check the fees you’re paying. If you have multiple small pots with high fees, consolidation might be worth considering.
6. Check Where Your Pension is Invested
Many people set up their pension and never look at where it’s actually invested. Big mistake! The investment choices can make a massive difference to your returns.
Your pension is usually invested in a mix of shares and bonds. The balance between these should align with your age and attitude to risk.
Generally, younger people can afford to take more risk (more shares, fewer bonds) since they have time to recover from market downturns. As you get closer to retirement, you might want to reduce risk.
What you can do right now: Log into your pension account and check your investment choices. If you’re young (under 40) and in a very low-risk option, you might want to consider a more growth-oriented approach.
7. Work at Least 35 Years (Social Security/Federal Benefit Systems)
If you’re in a system like Social Security in the US or certain government pension schemes, your benefits are often calculated based on your highest 35 years of earnings.
If you don’t work for at least 35 years, zeros get factored into the calculation, decreasing your payout. On the flip side, if you work more than 35 years, higher-earning years can replace lower-earning years in the calculation.
What you can do right now: Check your earnings record with your pension system. Identify any zero or low-income years that you might be able to replace with additional work.
8. Earn More If Possible
I know this sounds like “duh” advice, but increasing your income really does boost your pension. Higher earnings usually mean higher pension contributions, especially in workplace schemes where contributions are a percentage of salary.
This could mean:
- Asking for a raise
- Taking on additional responsibilities
- Developing new skills
- Starting a side hustle
- Changing jobs for better pay
Just be aware that in some systems, there’s a maximum amount of earnings that count toward your pension calculation. For example, in the US Social Security system for 2025, earnings up to $176,100 are used to calculate retirement payments.
What you can do right now: Make a plan for your next salary negotiation or explore opportunities for professional development that could lead to higher pay.
9. Delay Taking Your Pension
This is one of the most powerful strategies for those nearing retirement. Delaying when you start taking your pension can significantly increase the amount you’ll receive.
In many pension systems, your payments increase by a set percentage for each year you delay. For instance, in the US Social Security system, benefits increase by about 8% for each year you delay claiming after your full retirement age, up to age 70.
What you can do right now: Calculate how much your pension might increase if you delay taking it. This can help you decide if working a few more years makes financial sense for you.
10. Consider Adding Lump Sums
If you receive windfalls like bonuses, inheritances, or other large sums, consider putting some into your pension. This can help fill gaps in your contribution history and benefit from tax relief.
Most people can get tax relief on pension contributions up to 100% of their earnings (capped at certain limits, like £60,000 in the UK). This makes pensions a very tax-efficient way to save.
What you can do right now: If you’re expecting a bonus or other windfall, decide in advance what percentage you’ll add to your pension before you’re tempted to spend it all.
11. Check Your Spousal Benefits
If you’re married, you may have options to maximize your combined pension benefits. In some systems, spouses can claim benefits based on their own work record or up to a percentage of their partner’s benefit, whichever is higher.
Understanding these rules can help you coordinate when each partner should claim their benefits to maximize your total household income in retirement.
What you can do right now: If you’re married, discuss retirement planning together and research the spousal benefit options in your pension system.
12. Regularly Check Your Pension Records
Errors in your pension records can cost you thousands over your retirement. It’s important to regularly check that all your contributions have been correctly recorded.
I remember talking to a client who discovered his employer hadn’t been making the correct contributions for three years! By catching this early, he was able to get it corrected before retirement.
What you can do right now: Download your pension statement or create an online account with your pension provider to check your contributions and projected benefits.
How Much Should You Aim For?
A common question I get is “How much should I be saving for retirement?” While there’s no one-size-fits-all answer, a good rule of thumb is:
Take the age you start saving and divide by 2. That’s the percentage of your pre-tax salary you should consider saving each year.
So if you start at age 30, aim to save about 15% of your salary. Starting at 40? You’re looking at 20%.
Real-Life Example: John’s Pension Boost
My colleague John realized at 45 that his pension was way too small. Here’s what he did:
- Increased his contribution from 5% to 8% of salary
- Found two lost pensions from previous employers
- Consolidated all his pensions into one low-fee provider
- Switched from a very conservative investment strategy to a moderate one
- Negotiated a salary increase and put half of it toward his pension
Five years later, his projected pension had increased by nearly 40%. Not bad for changes that didn’t dramatically affect his lifestyle!
The Biggest Mistakes People Make
I’ve seen too many people make these common errors:
- Leaving free money on the table by not maximizing employer matches
- Forgetting about old pension pots from previous jobs
- Investing too conservatively when they’re young
- Taking cash from their pension too early without considering the long-term impact
- Not checking for errors in their pension records
Avoid these pitfalls and you’ll be ahead of most people.
When Should You Get Professional Advice?
While the tips I’ve shared can help most people, there are times when professional financial advice makes sense:
- If you have a defined benefit (final salary) pension and are considering transferring it
- If you’re approaching retirement and need to decide how to take your income
- If you have complex tax circumstances
- If you have a very large pension pot approaching the lifetime allowance limits
A good financial advisor can save you more than their fee in these situations.
Boosting your pension doesn’t require financial genius or massive sacrifices. The most important things are starting early, saving consistently, and making informed decisions.
Remember, even small increases to your contributions can have a dramatic effect over time thanks to compounding. And it’s never too late to improve your pension situation – even if retirement is just a few years away.
I hope these strategies help you build a pension that’ll support the retirement you want. Feel free to drop me a comment if you have questions about any of these approaches!
What’s one action you’re going to take this week to boost your pension?
Leverage tax-efficient pension strategies
“Should I max out my pension?” Maybe. Tax planning plays an important role in pension maximization. While you should contribute early and often to your pension plan, contributions to tax-deferred retirement accounts, such as 401(k)s or IRAs, can also lower your taxable income while growing your pension investments.
Remember: maximizing your pension isn’t just accumulating tax-deferred savings — it’s also strategically managing withdrawals to help minimize tax liabilities in retirement.
One tax-efficient strategy is converting traditional pension savings into a Roth account. While this incurs taxes at the time of conversion, it allows your pension to grow tax-free and offers tax-free withdrawals in retirement. This can be especially advantageous if you anticipate being in a higher tax bracket later in life.
Long-term benefits for survivorship
In some cases, income splitting also benefits survivorship. If one spouse passes away, the remaining partner may have a lower tax burden on their combined retirement income, allowing more flexibility in managing finances.
This strategy is most effective when incorporated into a comprehensive financial plan, which an Avidian advisor can assist with, and can help both partners benefit from a well-planned retirement.
How To Value My Pension?
FAQ
How do I increase my state pension?
Each qualifying year after 6 April 2016 added to your National Insurance record increases your State Pension amount, up to the full rate (£230.25 a week). Get a State Pension forecast or check your State Pension award letter to see what you’ll get. You might be able to add more National Insurance qualifying years by:
How can I increase my Social Security income in retirement?
Upping your income by asking for a raise or earning income from a side job will increase the amount you receive from Social Security in retirement.
How can I boost my pension savings?
We explain the ways you can boost your pension savings. 1. Find and reclaim lost pensions 2. Check the cost of increasing your contributions 3. Check if you can boost your State Pension 4. Check if you can claim extra pension tax relief 5. Consider switching providers for lower pension fees 6. Consider choosing your own investments 7.
How do I increase my high-3 pension?
Consequently, there are 3 main ways to increase your high-3: The FERS multiplier is almost always 1% for most federal employees. The only time it’s not 1% is when someone retires at age 62 or later with at least 20 years of service. In this case, the multiplier would be 1.1% (which means your pension will be 10% higher!).
How do I increase my FERS pension?
Here are some of the most common strategies to increase your FERS pension. These are the only things that matter when trying to increase your pension: There are two ways to increase your years of service: With respect to number 2, any unused sick leave you have at retirement will increase your years of service to increase your pension.
How do I increase my pension if I retire at 62?
The only time it’s not 1% is when someone retires at age 62 or later with at least 20 years of service. In this case, the multiplier would be 1.1% (which means your pension will be 10% higher!). The only way to increase your multiplier is to work until 62 and have at least 20 years of service.
Can you increase your pension?
Regularly add extra money to your pension savings
If you can afford to, you should think about saving more. The easiest way to save more is directly from your pay packet. Talk to your employer to see if they can set up the extra payments on your behalf. You never know, your employer may top up their contributions too!
What to do if your pension is not enough?
You may be able to pay extra amounts (contributions) into a pension fund when you are working, to make up for lost time. You’ll still be able to get basic State Pension and you may be able to get other help from the state, for example help to pay your rent or council tax.
Can you boost your State Pension?
You usually need 35 qualifying years of National Insurance (NI) contributions to get the full State Pension. If you don’t have enough, you can pay to fill gaps in your record to boost how much you get – even if you’re already getting your State Pension.
How to get a higher pension?
They can apply with the regional EPF offices or online (as shown below) for the higher pension claim. To receive higher pensions, qualified employees who joined EPS-95 but are retired or still employed after 2014 may apply online (as shown below) or in person at the relevant regional EPF offices by July 11, 2023.