Maximising Pension Contributions: A smart move before the October Budget

As the October 2024 budget approaches, many are contemplating the potential financial shifts that might accompany the budget announcement. A significant topic on everyone’s mind is pension contributions. With possible reductions in caps and allowance adjustments rumoured, now is the perfect time to maximise your pension benefits.

Why should pension contributions be a focus? Primarily, they offer a dual advantage: securing your financial future and enjoying present tax relief. Here’s a breakdown:

  • Tax relief perks: Your pension contributions attract tax relief at your income tax rate. For instance, as a basic rate taxpayer, contributing £80 means the government adds £20. Higher earners see even more considerable relief.
  • Anticipated changes: With the budget possibly altering contribution caps or tax relief, acting promptly can lock in current benefits before any limitations arise.

To optimise your pension contributions, consider these steps:

1. Review current contributions:

  • Ensure you’re maximising your employer’s matching contributions.
  • If you have room within the current annual allowance, think about increasing your contributions.

2. Assess your annual allowance:

  • The current allowance is £60,000, but this might change. Check your contributions against this to avoid unwanted tax charges.

3. Utilise carry forward:

  • Haven’t used your full allowance in the past three years? The ‘carry forward’ rule lets you contribute more than the current limit without penalties.

4. Consult a Financial Advisor:

  • Tailored advice can help you navigate potential changes and refine your pension strategy.

5. Stay updated:

  • Keeping abreast of budget announcements and financial news ensures you’re ready for any impactful changes.

The danger of inaction is real. Ignoring looming budget shifts could cost you valuable tax relief and compromise your financial future. By taking proactive measures today, you protect not only your pension savings but also the quality of your retirement years.

Remember, our financial environment is continually evolving. By maximising pension contributions now, you’re investing in a stable future. Don’t let these opportunities slip by in the bustle of the October budget. Contact us now.

 

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