Pensions expert on the ‘brilliant’ two-word benefit you can use to your advantage | Personal Finance | Finance

Britons have been urged to learn how their pensions work and increase their contributions where they can.

Felicia Hjertman, founder and CEO of investment group TILLIT, said the key benefit of pensions is that they effectively provide “free money”.

She told Express.co.uk: “The brilliant thing about a pension, which is unique in structure but available to most people, is that when you save into a pension, you get money from the Government in the form of tax relief.

“For basic rate taxpayers this means that for every £80 you pay into your pension, the Government will add £20 (20 per cent tax relief). If you are a higher-rate taxpayer, you can claim further relief on contributions.

“Therefore, as a higher-rate taxpayer, your pension contribution can potentially cost you as little as £60 to achieve a total contribution of £100.”

She said there are extra perks for those with a workplace pension. She commented: “If you are paying into a workplace pension, your employer also contributes at least three percent, and many pay in more than that, particularly if you contribute more than the minimum five percent. More free money!

“You should always check the details of your workplace pension scheme and make full use of it, to the extent that you can afford to (ultimately, paying more into your pension will have an impact on your take-home pay).

“But trust me, future you will thank you for it – and not all employers are as generous, so make the most of it when you can.”

The expert said that if a person has a generous pension from their employer but the provider they picked doesn’t meet the individual’s goals or values, they can go for a partial transfer.

She said: “Whilst most of us don’t (yet) get to pick our own pension provider, we can in most cases move the money ourselves into a pension that does meet our goals and values.

“Essentially you set up a regular transfer from your workplace pension into the pension of your choice – simples.

“The best way to find out if your workplace pension provider allows partial transfers (most do nowadays) is to contact them and ask.

“And while you are at it, contact your preferred provider as well and tell them what you want to do, you will sometimes find that providers whom you are moving money to, instead of from, can be particularly helpful.”

People preparing for their retirement years may also want to note that the state pension recently increased 8.5 percent.

Under the new rates, the full basic state pension has increased to £169.50 a week while the full new state pension now pays £221.20 a week.

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