Many pension funds and retirement funds offered by employers allow you to increase your contributions above what you are currently contributing based on your salary.
There are many benefits to increasing your contributions above the simple fact that your increased investment in the retirement fund will provide you with a more secure retirement but the part that is overlooked is the tax benefits of increasing your contribution.
The additional contributions to your company pension fund should come out of pre tax earnings and will thereby reduce the amount of tax you pay. This is particularly important for those who fall marginally within a higher tax bracket with the effect of bringing you into a lower tax bracket. This compounds the effect of your retirement savings and may also leave you with a little more cash in hand to deal with debt reduction.
Take your retirement seriously, consult a financial planner regularly and be more involved in your retirement planning. The law changes frequently, with the latest change in the tax law being the changes to the share incentive law which now effectively makes dividends on share incentive schemes taxable.
Your financial advisor will be in a position to advise you of the most efficient way to invest to minimise tax. Having said this, please be wary of advisors who suggest property sindication schemes or any scheme that appears to be designed to dodge tax. There are legal ways to take advantage of the tax breaks offered by the government for retirement funding purposes and while every accredited financial advisor should be someone you can trust, read the article on selecting a financial advisor before you trust the first person to offer you an alternative retirement funding scheme.
Retirement Annuities are very tax efficient retirement investment vehicles and a recommended investment vehicle for retirement investing.
