A Pension Check In Before the Tax Year Ends

Automatic enrolment has been one of the most successful financial policy changes in recent decades. More than ten million additional people are now saving into pensions as a result.

Most employed individuals contribute a total of 8% of qualifying earnings between themselves and their employer. It is a sensible baseline.

The Pensions and Lifetime Savings Association estimates that a single person retiring today would need around £31,000 per year for a moderate standard of living in retirement and more for a comfortable lifestyle. Many employees fall short of those benchmarks unless they increase their baseline contributions over time.

For someone earning £40,000 per year, contributing at minimum levels throughout their career may produce a retirement income that feels tighter than expected once inflation and longevity are accounted for.

The end of the tax year is therefore a useful moment to ask whether you are contributing only the minimum, whether a modest increase now would materially improve your long term position.

At Pension Pulse, when we model the difference between levels of contributions over 25 years, clients are often surprised by how significant the gap becomes. Small percentage increases compound meaningfully.

One of the most overlooked areas of pension planning is employer matching.

If your employer offers to match contributions above the minimum and you are not taking full advantage, you are effectively declining part of your remuneration. That is not always obvious on a payslip, but it is very real in long term projections.

We regularly meet individuals who assumed they were maximising employer contributions, only to discover they were just below the threshold required to receive the full match. 

That sort of oversight is not dramatic. It is simply expensive over time.

If you have received a bonus this tax year, there may be an opportunity to contribute part of it to your pension before the 5th April. Salary sacrifice arrangements can reduce income tax and National Insurance while strengthening retirement provision.

For higher earners, annual allowance tapering may apply once adjusted income exceeds certain thresholds, which makes year end calculations more important. The annual allowance currently stands at £60,000, but it reduces for some individuals with higher incomes.

For many everyday employed professionals, a more common issue is the reclaiming of higher rate tax relief. Under relief at source schemes, pension providers add basic rate tax relief automatically. Higher rate relief must often be reclaimed via self assessment or through HMRC. Each year, significant amounts go unclaimed simply because people assume it happens automatically.

Ensuring that tax relief is fully captured is not about being aggressive. It is about being efficient.

According to the Financial Conduct Authority’s Financial Lives Survey, a large proportion of pension savers remain in default investment strategies for extended periods without review. Default funds can be entirely appropriate, but they are not personalised by default.

Career progression, changing financial commitments and shifts in risk tolerance all influence whether your current investment approach still reflects your objectives.

At Pension Pulse, our conversations are not about encouraging unnecessary change. They are about alignment. We review what your current contributions and investment strategy are likely to produce and compare that with what you want retirement to look like in practice.

Often the outcome is reassurance. Occasionally it is a small adjustment. Either way, the clarity is valuable.

The full new State Pension is currently worth just over £11,000 per year, subject to qualifying National Insurance years. For many retirees, this forms the foundation of retirement income.

Checking your State Pension forecast, and National Insurance record, can highlight gaps that may still be addressed. In certain circumstances, voluntary contributions can increase entitlement, although this requires careful assessment.

Too often, we meet clients who have never checked their record and simply assume everything is in order. Year end provides a natural prompt to confirm rather than assume.