Important information: The value of investments and the income from them can go down as well as up, so you may get back less than you invest.

Free money… that’s the dream, isn’t it?

It’s also a reality - if you’re enrolled in your workplace pension scheme. That’s because every month your employer contributes a percentage of your salary into your pension savings. That’s extra money paid on top of your salary and it’s being invested for your future. You can also make contributions of your own and this might even mean more money from your employer, as some may even offer to match what you put in.

So, what can you do to make sure all the free money, that’s got your name on it, ends up being invested for your future?

Your pension is up to you

The most important thing to remember is that your pension belongs to you. Although your employer enrolled you and makes contributions, the investment is 100% yours. No matter where you work, that money will always be yours. So that means it’s up to you to take responsibility for making sure you are (quite literally) going to get the most out of it.

It’s always a good idea to find out what your employer will contribute, pay in as much as you can and keep an eye on how your investment is performing. Remember, the value of your investments can go down as well as up so you may get back less than you invest.

But isn’t it a long way away?

Retirement might be many years in the future, but what you do now could make a big difference to how you spend that retirement. If you start saving later, you might end up having less money in retirement. Partly because you may miss out on that free money from your employer, partly because you yourself might save less overall and partly because with less invested today, the investment has less time for growth opportunities.

So what should you do?

There are a few things you can do to make sure that you’re squirreling away every penny you’re entitled to. To maximise the free money and your pension savings, you should: 

1. Check the maximum that your employer will contribute (you’ll probably be able to find the details in your employment contract). Some employers may offer to pay in more, if you do (with a maximum limit).

2. Consider changing how much you save as you progress in your career. For example, if you get a pay rise, could you increase what you save into your pension? You could then enjoy some of the increase while also giving yourself a bit extra when you retire. You may also want to consider topping up your pension with any extra money that comes your way - such as a bonus. Of course, you may well have big plans for any extra money, but if you don’t or can save some of it towards your future, your future-self will likely thank you for it.

3. Remember, you get tax relief on your contributions. In other words, the value of your retirement savings are boosted by money that would otherwise have gone to HMRC. You can discover what it could be worth to you in our guide to making tax relief work for you.

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