Money Saving Expert founder Martin Lewis is urging everyone to take advantage of an ‘unbeatable’ pension savings trick which effectively doubles your money.
Martin returned on a special episode of his hit ITV programme The Martin Lewis Money Show Live on ITV1 and ITVX on Tuesday, where he took his audience through another tranche of penny pinching loopholes.
Speaking to his studio audience, Martin explained one pension trick which he says is an ‘absolute winner’ because you can turn £80 into £160, effectively doubling your money from your wages.
Martin explained: “When you put money in a pension, the first thing you need to understand is, you put money in from tax-free income.
“So normally when you work, if you earn £100 as a basic rate taxpayer on a full time job, you only get £80 in your pay packet because £20 comes off in tax. So you only take home £80. Make sense?
“But you could put the whole £100 in your pension, so you invest £100 in your pension, it only costs you £80.
“More so, if you work for someone, if you have an employer, then in certain circumstances, they have to match your contributions. So for every 5% you put in, they have to put in 3%.
“So let’s do the maths on that. You put in £100, it’s only costing you £80, but they have to put in £60. So you’re getting £160 worth of investment because your employer has to chip in, like extra money from them. It only costs you £80. Unbeatable. Absolute winner.”
Martin added that for young people, you can still make pension contributions even if you’re under the minimum age for automatic enrolment – and the sooner you start making pension savings, the better off you’ll be in later life.
Martin added: “The rules say if you’re aged 22 and earn over £10,000 a year, they must automatically opt you into a pension and they have to match your contributions.
“If you’re younger they don’t, but if you’re aged over 16 and you earn over about £6,300 a year, you can ask to be put in those pension schemes and your employer must match your contributions. They cannot legally say no.”
The Martin Lewis Money Show Live, Tuesday September 30 episode is still available to watch via ITVX.
