7 Ways to Make Your Pensions Work Harder for You in 2025
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only. You should always seek professional advice from an appropriately qualified adviser.
All contents are based on our understanding of current legislation, which is subject to change, any information provided here is only correct at the time of posting.
There is a risk to your capital and you may not get back the full amount invested. The value of investments, as well as the income from them, can fall as well as rise.
As we enter a new year, it’s a perfect time to review your financial plans, especially your pensions. Whether you’re preparing for retirement or simply want to maximise the value of your pension pot, 2025 could be the year you take your pension strategy to the next level. Here are seven ways to make your pensions work harder for you this year:
1. Review Your Contributions Regularly
Many people underestimate how much they’ll need in retirement. In 2025, make it a priority to review your pension contributions. Are you paying in enough to meet your long-term goals?
Why this matters: Small increases in contributions can have a big impact over time due compound growth, increasing your monthly contributions may allow these to keep pace with inflation.
Tip: If you’re employed, check whether your employer offers matching contributions beyond the legal minimum. If they do, consider maximising your contributions to take full advantage.
2. Consolidate Old Pension
If you’ve had multiple jobs, you might have several workplace pensions scattered across providers. Tracking and managing these can be a hassle, and fees may be eating into your returns.
Why this matters: Consolidating pensions into a single plan can reduce fees, simplify management, and give you a clearer view of your overall retirement savings.
How to do it: Before transferring, check for any exit fees or valuable benefits that may be lost upon transferring plans. You should always seek professional financial advice to ensure you don’t lose valuable guarantees.
3. Check Your Pension Charges
High fees can erode your pension savings over time, leaving you with less in retirement. Even a small difference in annual charges can make a significant impact over decades.
What to do: Compare the fees on your current pension with other providers. Are you paying more than you should?
4. Align Your Investments with Your Goals
Your pension isn’t just about saving; it’s also about growing your money. However, how your pension is invested plays a significant role in its performance.
What to check: Are your pension funds invested in line with your risk tolerance and retirement timeline? Younger savers may want to focus on higher-growth investments, while those closer to retirement may prioritise stability.
How to adjust: Most providers allow you to switch funds. If you’re unsure, speak to suitably qualified financial adviser about aligning your investments with your financial goals.
5. Make the Most of Tax Relief
Tax relief is one of the most attractive benefits of pensions in the UK, and you should ensure you’re making full use of it in 2025.
How it works: For every £100.00 you contribute to a personal pension, the government adds an extra £25.00 for basic-rate taxpayers. Higher and additional-rate taxpayers can claim even more through their tax returns.
Tip: Subject to having sufficient relevant income, you may wish to consider using unused allowances from the past three tax-years under the carry forward rules. This can be particularly valuable if you’ve had fluctuating income or received a windfall.
6. Consider Your Retirement Options if You’re Near Retirement
For those approaching retirement, drawdown can offer a flexible way to access your pension savings while keeping the remainder invested, meanwhile annuities can provide a valuable source of guaranteed income in your retirement. Your current investment choice may be dependent on which option/or combination of options you may utilise
Why this matters: Your current investment choice may be dependent on which option/or combination of options you may utilise
What to do: Work with a financial adviser to create a sustainable retirement plan to meet your retirement objectives
7. Stay Informed About Pension Legislation Changes
The government frequently updates pension rules, and staying informed can help you make smarter decisions.
• Auto-Enrolment: Changes to contribution rates or minimum earnings thresholds may affect how much you save.
• Pension Age: Ensure you’re aware of the changes to the forecast state pension age, the opportunity to purchase missing/incomplete years, and any changes to the age at which you can access private pensions due to increase in 2028.
Real-Life Example: Sarah’s Pension Makeover
Sarah, aged 45, decided to review her pensions at the start of 2025. She realised she had four separate workplace pensions from previous jobs, each with different fees and investment strategies. By consolidating these, she reduced her annual charges by 0.50% per annum.
She also increased her monthly contributions by £50.00, which, thanks to tax relief meant her gross contribution was £62.50.
Final Thoughts
Your pension is one of the most important investments you’ll ever make, and 2025 offers plenty of opportunities to optimise it. Whether you’re consolidating old pensions, adjusting your investments, or making the most of tax relief, taking proactive steps today can make a big difference in your retirement tomorrow.
If you’re unsure where to start, we recommend that you speak to a suitably qualified financial adviser. With the right support you can make your pensions work harder and achieve the retirement lifestyle you are aiming for.