Free money here!

“What's the catch?” we hear you ask. Simple, save for your future!

With so many different things to budget for throughout the year, retirement savings might not always be top of mind, but with people living longer, and therefore spending more time in retirement, maybe it should be higher up the 'to-do list'. And saving is easier than you might think. 

Option 1: Don't opt out!

The government have introduced automatic enrolment, which means all eligible employees must be enrolled into a workplace pension scheme, unless you opt out. We suggest that you do not opt out without seriously thinking about it first. Why would you? It's free money from your employer; how often does that happen? Below shows what should be contributed to your pension once enrolled.

From the above example, between 1 October 2017 and 30 September 2018, you must have 5% of your salary contributed to your pension. From that 5% your employer must contribute a minimum of 2%, with you making up the difference. There may even be some lucky ones out there who don't have to contribute, as your employer is paying the full amount.

Option 2: Open a personal pension with Chelsea

Tax relief is another great way to get 'free money'. When your employer contributes to your pension, the company will receive tax relief, making it a great reason for employers to do it. But when you make a personal contribution, tax relief gets added to your pension pot. So, for those of you whose employer is paying the full contribution into your workplace pension, take advantage of this and get some extra 'free money' by contributing to a personal pension through Chelsea. 

How does the tax relief work? On all contributions within your annual allowance (this is based on relevant earnings) you will receive 20% tax relief. That means, if you contribute £80 to your pension, £100 will be saved after tax relief.

On top of this, if you are a higher rate or additional rate tax payer, you can also claim the extra tax relief through self-assessment.

For more of a breakdown on current tax relief rules, see below:

Tax relief is paid slightly different when it comes to auto enrolment. In most, cases your contribution will be paid before tax has been deducted. This means that the contribution will come from your salary, but before tax has been taken. Rather than £80 being invested and the government adding £20 as tax relief, the full £100 is invested because no tax was taken to begin with.