As the new tax year begins, Penfold is encouraging savers to take a step back and give their long-term finances a quick check-up – not just their monthly budgets
With so much focus on budgeting apps, cash ISAs and quick wins, pensions often get pushed down the list. But according to Chris Eastwood, CEO of leading UK workplace pension provider, Penfold, the new tax year is the perfect moment to change that.
“There’s always a burst of motivation at the start of the tax year, but most of it gets directed towards short-term fixes, cutting a subscription here, tweaking a budget there,” said Eastwood. “The truth is, no budgeting hack will ever come close to the long-term impact of making sure your pension is properly set up. It’s the most powerful ‘set-and-forget’ financial decision most people can make.”
Eastwood has highlighted three simple steps every saver should take at the start of the new tax year to ensure their pension is working as hard as it should be.
1. Check your contribution rate
“The new tax year is a natural moment to ask whether you’re putting enough into your pension,” said Eastwood. “Even a one percentage point increase in your contribution rate, made today, can have a dramatic effect on your retirement pot over decades. The compounding effect is remarkable and the sooner you act the more powerful it becomes. A few minutes now could mean tens of thousands of pounds more in retirement.”
2. Nominate your beneficiary
“One of the most overlooked aspects of pension admin is naming a beneficiary, the person who would receive your pension in the event of your death,” said Eastwood. “Unlike other assets, your pension typically sits outside your estate, meaning it doesn’t automatically go where your will directs. Without a nominated beneficiary, the decision falls to your provider or trustees. It takes minutes to update and could spare your loved one’s significant stress and uncertainty.”
3. Switch on salary sacrifice where possible
“If your employer offers salary sacrifice, and many do, the new tax year is the perfect moment to switch it on if you haven’t already,” added Eastwood. “By making pension contributions from your gross salary before tax and National Insurance, you reduce your taxable income and your NI liability. Your employer saves on NI contributions too and many pass that saving back to employees as an additional pension top-up. It’s one of the most effective pay rises hiding in plain sight.”
Eastwood concluded: “The new tax year is a genuine opportunity to build better money habits. Not by overhauling everything overnight, but by taking a few simple steps. Check your contributions, name your beneficiary and turn on salary sacrifice. That’s it. Do those three things and you’re ahead of the majority of savers in this country.”