Take control of your pension—whatever the Autumn Budget brings

With the Autumn Budget scheduled for 30 October 2024, many people are wondering how potential changes may impact their current finances, pensions and their future.

While government decisions on tax rises, tax relief, and pension policies are out of your hands, it’s important to focus on the things that you can control and that could impact your financial future. 

Here are some practical steps you can take today to make sure your pension is working hard for you, no matter what the Chancellor announces next month.

Maximise your workplace pension contributions

One of the easiest ways to boost your pension savings is to contribute consistently to your workplace pension. Most importantly, if your employer offers a contribution match, make sure you’re taking full advantage of it. Some employers will match your contributions up to a certain percentage, so it’s worthwhile to contribute as much as possible up to the maximum they offer. 

For instance, if your employer is willing to match up to 8% when you contribute 8% as well, that’s essentially free money from your employer being added to your retirement fund. Your contribution is effectively doubled, and will also benefit from tax relief from the government automatically applied to what you contribute. This is an important benefit and could super-charge your pension savings, so make sure you check what your company’s contribution policy is and how you can make it work best for you.

Check that your pension investments match your goals and risk tolerance

Your pension is an investment account where you make regular contributions over your working life, designed to potentially grow over the long term. That means you need to be mindful of where your pension – private or workplace – is being invested. One of the key things to consider with your pension is that your investments match your financial goals and your risk tolerance. 

Are you close to retirement? You might want to invest in low-risk portfolios to protect your savings. If you’re still going to be contributing to your pension for another 30 years, you might prefer higher-risk investments that offer the potential for higher growth. It’s important to review your pension regularly to make sure it matches your current situation and long-term goals. We’d recommend reviewing your pension annually to keep things on track. 

With a Moneyfarm pension you’ll get an expertly managed pension portfolio, matched to you based on your risk profile and financial situation, so you can relax and be confident your pension is always invested in the best place for you.

Watch out for hidden pension fees

Fees can significantly impact your pension growth over time, especially if you’re paying more than you should be. It’s becoming more common for people to have multiple pensions across different providers, each charging their own set of fees, based on the funds you’re invested in and even the amount you have invested. But high management fees can eat away at your returns, meaning less money for you in the future. Even if there’s only a 0.5% difference between fees, the more expensive pension can cost you thousands of pounds in the long run.

Like reviewing the funds your pension is invested in, it’s just as important to review the fees you’re being charged on all your pensions. The more small pension pots you have, the more work this could be for you, but it’s so important to compare the fees of all your different pension providers and ensure you’re not overpaying, and switch to lower cost pensions if you need to. Even better, you could combine all your old pensions into one new pension plan – making it easier to keep track of the fees you pay.

Combine all your old pensions into one

This leads to the next step you can take – finding and combining all your old pensions. Like most people, if you’ve had multiple jobs throughout your career, chances are you have more than one pension pot. While it might seem harmless to leave your pensions and money scattered around in different pots, managing multiple pensions can be complicated and risky. You could be paying unnecessary fees across different providers and it might be hard to keep track of how each one is performing. And the more pots you have, the easier it is to lose track of them and your money.

By combining your old pensions into one pot, you make it easier to manage your pension overall. Not only does this reduce your life admin, but it also gives you a clearer view of your overall retirement savings, making it easier to check if you’re hitting your saving goals for the future and make adjustments if you need to. Our Find, Check & Transfer service can even help track down lost pensions for you and then transfer them into a new Moneyfarm pension with a managed portfolio that matches your needs and financial goals.

Take advantage of the tax protections your pension offers

With tax rates on taxable savings rising and other allowances shrinking, it’s more important than ever to recognise pensions’ unique tax protections. Your pension pot offers shelter from capital gains, dividend, and income taxes—not just while you’re building your retirement fund, but also during retirement. This makes pensions one of the most tax-efficient vehicles available for long-term savings.

Reacting to potential or future budget changes by pulling money out of your pension now could result in an unnecessary tax hit when you try to reinvest or save the money elsewhere. Instead, consider the long-term benefits of keeping your money in a pension and make sure you’re not making hasty decisions that could cost you more in taxes down the road.

And even if tax relief or the annual allowance are lowered in the upcoming budget, they are still valuable benefits when planning for the future and building your wealth. Currently, If you’re a higher-rate taxpayer, you can get up to 40% tax relief (20% automatically applied and 20% claimed on your tax return). This means an annual £10,000 contribution to your pension could cost you just £6,000, with the government topping it up £4,000. But to get the full benefit you must complete a self-assessment tax return!

Stay calm and focus on the things that you can control

As the Autumn Budget approaches, it’s important to stay calm and focus on what you can control when it comes to your finances, especially your pension. By maximising your employer-matched contributions, aligning your pension investments with your goals, monitoring fees, consolidating old pensions, and claiming the full tax advantages pensions offer, you can get your future finances in a healthy position, regardless of what happens in the budget.

As always, our Investment Consultants are on hand at any time to talk you through your investment options and how to get the most from your pension.

As with all investing, your capital is at risk. The value of your portfolio with Moneyfarm can go down as well as up and you may get back less than you invest. A pension may not be right for everyone. Tax treatment depends on your individual circumstances and may be subject to change in the future. If you are unsure if a pension is right for you, please seek financial advice.