Advice on saving for retirement: Britons urged to take advantage of ‘most profitable form of saving’ | Personal Finances | Finance

There are a variety of tools available that could help people save money for the future, and more specifically for retirement. Work pensions were introduced to help people start contributing to their pension fund, and tax breaks could also make private saving more attractive.

Adrian Lowery, personal finance expert at investment platform Bestinvest urged Britons to take advantage of pension tax benefits and employer contributions as a way to increase their retirement savings.

Mr. Lowery explained the potential benefits that pension savings can bring, with tax breaks available to people saving for retirement.

He said: “For many workers, saving for a business or personal retirement is the most profitable form of savings.

“It’s because most people get tax relief on their government contributions to their marginal income tax rate.

READ MORE: State pension ‘isn’t going to be enough’ – how Britons can cope in retirement

There is no limit to how much people can generally save, but anything over £ 40,000 will not be exempt from tax.

Workplace pensions are another potential way for Britons to increase their retirement savings, as employers match employees’ contributions.

Mr Lowery explained: “In the case of company plans, the employer pays a minimum of three percent as stipulated in the automatic enrollment rules, but many companies will match employee contributions at a higher amount – another source of “free money”. “

He also recalled that the earliest age at which people can draw from their private pensions is changing.

Funds are currently not accessible until age 55, but this will increase to age 57 in 2028.

This age is known as the normal minimum retirement age (NMPA), which sets the earliest point at which Britons can draw their private pensions.

Anyone who accessed their pension fund before this may be subject to unauthorized payment charges, so it should be remembered that the restrictions are in place.

Awareness of NMPA is low, with research from the Pension Management Institute showing that 82% of workers in their 40s were not fully aware that the threshold would drop from 55 to 57.

They also found that only four percent of people knew at what age they were allowed to draw their pension.

A lack of understanding of NMPA could lead to people being trapped and paying the price.

The NMPA is increased based on the statutory retirement age, which is currently expected to rise from 66 to 68 by 2046.

This is different from the NMPA, and dictates when people become eligible to receive the state pension. It is not possible to receive a state pension before the statutory retirement age.

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