5 easy ways to boost your retirement in 2025

We head towards the new year with all kinds of ideas about how we are going to improve our finances.

Retirement might feel like a very long way away, but it’s important not to be complacent. Taking a set and forget approach can mean your planning falls foul of various pitfalls that can have a big impact on what you end up with.

Taking some simple actions now can make a huge difference.

Here are five pension pitfalls to avoid that should help boost your retirement income.

This article isn’t personal advice. The government’s Pension Wise service can help if you’re over 50 and need guidance. You can also get personalised financial advice. Pension and tax rules can change, and any benefits depend on individual circumstances and remember, Scottish tax rates and bands are different. You also can’t access money in a pension until age 55 (rising to 57 in 2028).

Pension tax relief is a hidden hero of retirement that can see a £100 contribution only cost £80 for a basic-rate taxpayer. Higher and additional-rate taxpayers get an even better deal with that £100 pension contribution only costing them £60 and £55 respectively.

However, in some cases, you won’t receive your full amount of tax relief automatically.

Basic-rate tax relief will usually be added to your contribution automatically and you won’t need to claim extra relief if your pension is set up under salary sacrifice either.

However, if you’re a higher or additional-rate taxpayer, you might need to claim the extra 20% or 25% tax relief through self-assessment.

If your pension is set up under a net pay arrangement, then the correct tax relief will be taken. However, if your pension is set up under what’s known as relief at source, then you will need to claim the extra tax relief through self-assessment.

This is because if your pension is a net pay arrangement, your pension contribution is deducted from your salary before income tax is paid. Your scheme will then claim back tax relief at your marginal rate of income tax.

If it’s set up as relief at source, contributions are deducted from your salary after tax. The employer takes 80% of the contribution from the employee’s salary and then reclaims the extra 20% from HMRC. This means if you’re entitled to tax relief at a higher rate, then you need to claim it.

It can be easy to set your contributions at the auto-enrolment minimum level and forget to update them.

For some people this will be enough to give them what they need in retirement, but it won’t be for others. And if they don’t engage, they could be in for a nasty shock.

Taking steps, like increasing your contributions whenever you get a pay rise, can be a relatively painless way of boosting your pension.

It’s also worth seeing if your employer will increase their contribution if you increase yours. This is known as an employer match, and it can make a huge difference to how much goes into your pension.

Many of us can put up to £60,000 per year into our pensions and still benefit from tax relief.

If you have any unused allowances from the past three years, you can also use these through a process called carry forward. It means you could be able to make a contribution of up to £200,000 to your pension, like the Self-Invested Personal Pension (SIPP), this tax year (as long as you earn at least this amount in the current tax year).

If you’ve used up your own allowances, you can contribute up to £2,880 per year to the SIPP of a non-working spouse or child. They will then receive a government top up in the form of tax relief bringing the contribution to £3,600.

It’s easy to lose track of pensions from old employers, but not tracking them down can leave you thousands of pounds worse off.

If you think a pension has gone astray, you can contact the government’s Pension Tracing Service. You’ll need either the name of your employer or pension provider and they’ll give you contact details so you can get in touch.

Once you’ve gathered your pensions together it might make sense to bring them all together.

This could save you time, money and admin.

However, before you do, make sure you aren’t incurring any expensive exit fees or missing out on valuable benefits like guaranteed annuity rates.

Annuities are offering great value right now, but you need to make sure you search the market to get the best deal for you.

Quotes vary between providers and taking the first one on offer could leave you thousands of pounds worse off over the course of your retirement.

Latest data from our annuity comparison tool shows a 65-year-old with a £100,000 pension can get up to £7,281 per year from a single life level annuity with a five-year guarantee – based on an average postcode, paid monthly in advance and with no increase.

Just remember, once you buy an annuity, it can’t be unwound. So it’s well worth taking the time scan the market.