A children’s pension, personal pension, or someone else paying into your pension could all trigger extra tax relief payments of up to £720, experts have said.
This could boost your pension pot in retirement without costing you any extra now.
Ethical finance firm, Path Financial, said for parents who are interested in boosting their kids’ pension pots before they reach adulthood, if they pay in up to £2,880 a year, the Treasury will add up to £720 for free in tax relief.
Similarly, if someone has a pension and their partner, friend, relative or anybody else contributes up to £2,880 a year, once again, they will be entitled up to £720 for free in tax relief from the Treasury.
Putting up to £2,880 a year in your own pension can also trigger up to £720 in tax relief payments from the Treasury.
Rowan Harding, financial planner at Path Financial, said: “Essentially, if you put £2,880 in your pension pot in one year, you will be entitled to £720 in tax relief from the Government.
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“This money can be accrued yourself, through friends or relatives contributing to your pot or for children, if their parents, guardians or those close to them contribute too. You can contribute using one of these ways or more, but you can’t get more than the £720 tax relief you’re entitled to.
“These three ways could prove lucrative in your old age if you start using them early because the more money you build up, the more you’ll have to spend when you reach retirement.”
Pension payment increase confirmed for 2025
Pensioners have been promised an extra £470 for pensioners next year, as the Government confirmed their commitment to the pension triple lock.
The triple lock guarantees an increase in pensions in line with average earnings, inflation or 2.5%, whichever is highest.
Making the announcement at last month’s budget, Chancellor Rachel Reeves said: “This commitment means that while working-age benefits will be uprated in line with CPI at 1.7%, the basic and new state pension will be uprated by 4.1% in 2025-26.
“This means that over 12 million pensioners will gain up to £470 next year.”
She added: “The pension credit standard minimum guarantee will also rise by 4.1% from around £11,400 per year to around £11,850 for a single pensioner.”
