How to get up to £1000 towards your Pension Each Year

How to get up to £1000 towards your pension each year

Many people will be missing out on up to £1000 per year towards their pension fund. This is because they aren’t investing in a Lifetime ISA (LISA). Since their launch in 2017, LISAs have been relatively ignored. However, £1000 towards your pension is nothing to be scoffed at.

What is a LISA?

A LISA allows you to save up to £4,000 each tax year, and the state then adds 25% on to the top of what you save. This means that annually you could be receiving £1000 towards your pension. You also earn interest on your savings that are totally tax-free.

You have to be between 18 and 39 to open a LISA, and the retirement funds aren’t able to be accessed until you are over 60. If you have used a LISA in the past to purchase a home, you can still keep it open to start saving up for your retirement.

LISAs for pensions

The oldest you can be to open a LISA is 39, so you have to be prepared to be in it for the long haul as you can only access your pension funds at the age of 60. The rules could change between then and now, but right now if you can save £4000 in your LISA you can earn up to £1000 per year of savings from the state.

Once you turn 60 you can access all of the money in your LISA. It doesn’t have to be withdrawn all at once either. The longer you leave the savings in there, the better as it continues to grow interest.

All of the cash you take out of your LISA account is completely tax-free. However, if you do make the maximum savings and get £1000 per year from the state for your pension, it will affect your eligibility for other benefits. A LISA is an asset and the funds in the account are taken into consideration when applying for any kind of benefits.

Other ways to boost your pension

As well as investing in a LISA there are other ways you can add sums of money to your pension each year. One is working with an employer who contributes to your pension funds. Research has shown that around 42% of pensioners in the UK have up to £1,013 a year in unclaimed benefits, with many missing out on much more.

The best thing to do when you are reaching retirement age is to check with your local government what you can be claiming as an older person or as a pensioner.

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