Pension Blog Series: Episode 2 – Reversing damage to long-term retirement plans caused by reducing or stopping pension premiums

In Episode 2 of our new Pensions blog series, we look at what you can do to reverse the damage to your long-term retirement plans caused by reducing or stopping your pension premiums.

There are several ways someone can rebuild their pension fund, and we have listed them below:

  • Increase / restart your personal contribution as soon as possible.
  • If you normally pay a set cash amount every month into your pension, consider changing to a set percentage of salary so that the pension premiums increase in line with any salary rises in the future.
  • If the pension premium is deducted via Salary Sacrifice / Exchange, request that the savings made as a result of this be re-invested back into the pension policy.
  • If the pension premium is not deducted via Salary Sacrifice / Exchange, ask the employer about this option as it will enable both the employee and the employer to potentially save money that can be used to enhance pension premiums.
  • Automatic enrolment legislation will undoubtedly increase the minimum premium levels that the employee and employer will be expected to pay in future years.
  • If bonuses are earned, some or all of these can be sacrificed / exchanged for additional pension premiums.
  • If an individual has a lump sum to invest, this can be used to top-up the pension for the current tax year and potentially the three previous tax years as well.

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Other episodes in this series

Episode 1 – The impact of COVID-19 on pensions
Episode 3 – Gender pensions gap
Episode 4 – Why are more people turning to their pensions in the crisis?
Episode 5 – Lump sum losses: the tax hit of large pension withdrawals

The contents of this article are for information only and should not be seen as advice or recommendation to act. Always seek financial advice before taking action in respect of your pension planning.