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Britons urged not to miss out on 'helping hand' in retirement saving

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He said: “Whether you are new to investing or nearing retirement, pensions are likely to be an important consideration. When you make a contribution to your pension, the government adds money. This is called ‘tax relief’ and is one of the main advantages of using a pension to save for retirement.

“Not everyone is aware of this special helping hand offered to pensions, but it can have a considerable impact on the size of your retirement funds and the income you are paid.

“In the 2020/21 tax year, an investor can receive up to 45 percent tax relief when they make a contribution to a personal pension such as a SIPP (Self Invested Personal Pension), with 20 percent paid by the government into the pension and any higher and additional rate income tax reclaimable.

“For example, an investor contributes £8,000 into their SIPP and £2,000 is claimed back from HMRC by the pension provider meaning £10,000 is invested overall. A higher rate taxpayer could claim back up to a further 20 percent via their tax return, reducing the overall cost of the contribution to as little as £6,000. In the same instance, additional rate taxpayers could claim back up to a further 25 percent making the cost just £5,500 for a £10,000 contribution.

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