Making a difference by topping up
The following examples demonstrate the difference made to the value of your pension savings by increasing the regular contributions or making a one off single contribution. These are examples and the actual fund value and available pension may be less
than illustrated because the growth rate is not achieved or annuity rates are lower at the time the income is arranged
Increase in regular
contribution
Age
|
Current regular contribution
after tax relief
|
Current value
|
Selected retirement age
|
Value at retirement assuming current growth rate (4.5%)
|
Increase in regular contribution after tax relief
|
Value at retirement assuming revised contribution at current growth rate (4.5%)
|
50
|
£100 each month
|
£100,000
|
65
|
£134,000
|
+£150 each month
|
£162,000 |
In the above example, increasing contributions by £150 each month (after tax relief) could increase your pension by £28,000. If you converted this to a guaranteed income for life it would mean an increase in the amount you’d get, from £6,570 each year to £7,970 - assuming 25% of your pension was taken as a tax free cash lump sum.
This is an increase of over £1,400 every year for the rest of your life.
Single contribution
example
Age
|
Current regular contribution
|
Current value
|
Selected retirement age
|
Value at retirement assuming current growth rate (4.5%)
|
Single contribution
|
Value at retirement assuming revised contribution at current growth rate (4.5%)
|
50
|
£0 each month
|
£100,000
|
65
|
£114,000
|
£12,000
|
£128,000 |
In the above example, making a single contribution of £12,000 could increase your pension by £14,000. If you converted this to a guaranteed income for life it would mean an increase in the amount you'd get in, from £5,630 each year to £6,310 - assuming 25% of your pension was taken as a tax free cash lump sum.
This is an increase of £680 every year for the rest of your life.
Regular and Single contribution example
Age
|
Current regular contribution
|
Current value
|
Selected retirement age
|
Value at retirement assuming current growth rate (4.5%)
|
Increase in regular contribution after tax relief
|
Single contribution
|
Value at retirement assuming revised contribution at current growth rate (4.5%)
|
50
|
£0 each month
|
£100,000
|
65
|
£114,000
|
+£150 each month
|
£12,000 |
£157,000 |
In the above example, increasing contributions by £150 (after tax relief) and making a single contribution of £12,000 could increase your pension by £43,000. If you converted this to a guaranteed income for life it would mean an increase in the
amount you'd get, from £5,630 each year to £7,710 - assuming 25% of your pension was taken as a tax free cash lump sum.
This is an increase of £2,080 every year for the rest of your life.
These examples are for illustrative information purposes and should not be relied upon for your own personal circumstances.
- These calculations are based on any increases in contributions (including single contributions) being made on the example person's 50th birthday.
- We have assumed the annuity income will be paid monthly in advance, with a five year guarantee and no spouse element. The figure provided does not take into account the tax that may be due on annuity payments.
The above scenarios have been based on 2024/25 tax year calculations.