Pension Awareness events, which champion the importance of pensions and retirement planning, will run from 15 to 17 September. So, it’s an ideal time to improve your pensions knowledge and ensure that you’re making the most of every opportunity to boost your retirement savings pot.
Unfortunately, a significant portion of UK adults have a poor understanding of their pension wealth. A study by Standard Life found that 1 in 4 over-55s have never checked any of their pensions.
Yet, failing to engage with your pensions throughout your working life could mean you miss out on the retirement lifestyle you’ve always dreamed of.
So, keep reading to discover three frequently overlooked ways to increase your pensions and take control of your retirement wealth.
1. Use the “carry forward” rule
When you contribute to your workplace or private pension, you’ll receive tax relief at your highest marginal rate. As such, a £100 contribution only “costs” a basic-rate taxpayer £80, because they receive 20% relief.
That’s why paying into pensions is a tax-efficient way to save for retirement.
If you’re a higher- or additional-rate taxpayer, you could claim even more relief via your self-assessment tax return – 40% and 45% respectively.
However, you can usually only receive this tax relief on pension contributions up to your Annual Allowance, which for most people is ÂŁ60,000 in the 2025/26 year. Your tax-efficient contributions are limited to up to 100% of your earnings.
Your Annual Allowance may be lower if your income exceeds certain thresholds or you have already flexibly accessed your pension.
If you want to add more to your pension in any single tax year, taking advantage of the carry forward rule could allow you to do so tax-efficiently.
The rule works by allowing you to carry forward unused Annual Allowance from the last three tax years.
The example below shows how this could work in practice.
As you can see, if you were entitled to the full Annual Allowance each year and only used ÂŁ30,000 of this in the previous three tax years, you could carry forward ÂŁ80,000 unused allowance.
As a result, you could potentially contribute up to £140,000 to your pension in 2025/26 while still benefiting from tax relief – assuming your Annual Allowance this year is also £60,000.
It’s important to note, however, that any pension contributions made after you turn 75 will not be eligible for tax relief.
2. Set up salary sacrifice
Salary sacrifice is a workplace scheme that allows you to sacrifice a portion of your annual earnings in exchange for a non-cash benefit, such as pension contributions.
While it may sound contradictory, giving up some of your salary in exchange for such benefits could increase your take-home pay. This is because your Income Tax and National Insurance contributions (NICs) are likely to fall in line with your reduced earnings.
As such, salary sacrifice can be a tax-efficient way to boost your retirement savings.
Moreover, your employer may also pay less NICs, and they may be willing to contribute this saving to your pension.
Indeed, PensionsAge recently reported that an “unprecedented” number of employers are now offering salary sacrifice due to the recent increase in employer NICs. So, it’s worth asking your employer if they offer (or would consider offering) a salary sacrifice scheme.
According to the Pensions Expert, HMRC has conducted a review of salary sacrifice arrangements and made several proposals for change, which could limit or remove the tax benefits such schemes offer.
While it’s not clear whether any of these proposals will come into effect, it may be worth making the most of this tax-efficient strategy for bolstering your pensions wealth now.
3. Apply for “specific adult childcare credits”
Specific adult childcare credits are a way for grandparents and other family members to increase their State Pension entitlement by receiving National Insurance (NI) credits when caring for children under 12.
These credits work by transferring the weekly NI credit that a parent or carer receives as the Child Benefit recipient to an eligible family member who is caring for the child.
You may qualify for this credit if:
- The parents or main carer has claimed Child Benefit but does not need the credits
- You are an eligible family member, such as a grandparent, aunt, uncle, or older sibling
- You are ordinarily resident in the UK (excluding the Channel Islands and the Isle of Man)
- You were over 16 and under State Pension Age when you provided the childcare
- The child’s parent or carer supports your application
- You provided care for a child aged under 12.
IFA Magazine has revealed that a record number of grandparents and family members who care for young relatives have applied for specified adult childcare credits to boost their State Pension. There was a 43% increase in applications between October 2023 and September 2024, compared to the previous year.
This is perhaps unsurprising as the Independent has reported that 57% if parents with young children rely on grandparents for childcare support.
Yet, many people are unaware of this benefit and, as such, could be missing out on a valuable opportunity to increase their State Pension entitlement.
Indeed, each year of transferred credit is currently worth ÂŁ330 (2025/26) in additional State Pension income. This is equivalent to ÂŁ6,600 over a 20-year retirement and ÂŁ9,900 over a 30-year retirement.
While this may not seem substantial, along with other sources of income, it could help you achieve the retirement lifestyle you desire.
Get in touch
If you’re feeling overwhelmed by retirement planning and uncertain about how to boost your pension wealth, we can help.
Please get in touch by emailing info@lloydosullivan.co.uk or call 020 8941 9779 to see how we can assist you.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Workplace pensions are regulated by The Pension Regulator.
Production