What are the options for boosting your pension pot?

You may be able to grow your pension prospects if any retirement funds are on course to be smaller than you had hoped. By Vicky Shaw.

Ways to increase your pension ahead of retiring (Alamy/PA)

The gender pensions gap remains a big financial hurdle for many women, with caring responsibilities, career breaks and part-time jobs often leaving them with less as they head towards retirement than men.

Figures recently released by the Department for Work and Pensions (DWP) showed that between 2018 and 2020, a median average woman aged 55 to 59 had £94,000 on average built up in private pension wealth, while an equivalent man had £145,000.

Emma-Lou Montgomery, associate director for personal investing at Fidelity International says: “Lower income levels combined with career breaks or periods of part-time work to care for children or loved ones, means women are rarely on a level playing field when it comes to retirement saving.”

She adds: “For many women, retiring with a smaller pot than they hoped for is a reality today. If you find yourself in this position, there are some things you can consider.”

Montgomery has some suggestions for steps that anyone can potentially take if they’re approaching retirement with a smaller-than-hoped-for pension pot.

Firstly, she suggests speaking to an expert who can help you draw up a plan.

She says: “Revisit your goals, map these against your retirement income needs and draw up a financial plan. Speaking with a financial expert can also help you map out your exact financial retirement needs clearly.”

She also suggests getting to know the state pension.

Broadly speaking, people need 35 years of qualifying national insurance contributions to receive the full new state pension.

Montgomery suggests: “If you are in your 50s, it’s the perfect time to check your qualifying years and see how much you will be entitled to.”

It’s also worth bearing in mind that a deadline for people to plug gaps in national insurance (NI) records going back to April 2006 has been extended by HM Revenue and Customs (HMRC) to April 5 2025.

Tens of thousands of people have taken advantage to pay voluntary contributions – and HMRC expects the revised deadline to enable tens of thousands more to do the same.

The extension means that men born after April 5 1951 or women born after April 5 1953 have more time to check their records and decide whether to pay voluntary contributions. People can usually only pay voluntary NI contributions for the previous six tax years.

For some people, working past their state pension age may help to increase their eventual retirement income.

Deferring your state pension could increase the payments you receive when you eventually decide to claim it.

Montgomery adds: “This might be an option if you are well, can work, and want to bolster your pension income a little further.”

An alternative or addition to this may be increasing your current workplace pension contributions, if you’re able to do so.

Montgomery adds: “You might even benefit from higher employer contributions if you do this.”

She also suggests looking at how the pension is invested, adding: “As you move closer to retirement age, your investments will be moved into less risky asset classes.

“But if you are still trying to grow your savings it’s important to not de-risk your investments too early and miss out on potential opportunities for growth.

“If you are unsure about how to do this,  speak to your pension provider or a financial expert.”

And don’t forget to take assets other than your pension into account.

Montgomery says: “It’s not just your retirement pot that can help you manage your finances in retirement, think about the other assets you have.

“For example, you might want to consider downsizing and maximising the growth in property wealth over the last decade, to give you more money to play with. You should also factor in any savings you have in Isas or other accounts.”

People who are very close to retiring could also find out more about pension credit, to see if they are likely to be able to claim it in retirement.

Pension credit tops up retiree’s incomes, to help with your living costs if someone is over state pension age and on a low income.

It is sometimes described as a “gateway” benefit because people may also get help with other costs when they claim.

People can find out more about pension credit and making a claim at gov.uk/pension-credit.

Over-50s can also make an appointment with the free, Government-backed Pension Wise service to find out more about their options.

And you could check out the retirement living standards set by the Pensions and Lifetime Savings Association, which aim to give people a general idea of what kind of lifestyle they’re likely to end up with in retirement.

It’s also worth knowing that child benefit can help you build your pension, as by claiming the benefit you could receive national insurance credits, which count towards your state pension.