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Catherine Addison-Swan

Martin Lewis explains how 'pimping your pension' with key steps could help you gain thousands

Martin Lewis has issued important advice for anyone who wants to make the most out of their pension - from easy ways to boost their cash to avoiding costly mistakes.

The MoneySavingExpert founder explained on his podcast and in his latest weekly email that it's not just those approaching retirement who should be thinking about their pension - anyone from the age of 16 ought to be taking action where they can to maximise their money for later years. Those who are already receiving their State Pension can also take steps to make sure they aren't missing out, such as checking whether they're eligible for Pension Credit or if they may be entitled to National Insurance credits.

"Some of you will be able to gain tens of thousands of pounds," Martin said as he shared key advice about deferring your pension, auto-enrolment, and nomination forms, as well as a handy rule of thumb to see how much of your salary you should be saving. Here are ten of his top tips that you should check now when it comes to your pension.

READ MORE: Martin Lewis warns minimum wage workers of seven ways they could be 'underpaid'

Don't accidentally leave your pension to your ex

You can't leave pension savings in your will, which means that if you die before you take out your private or company pension then the provider or trustees will decide what happens to it. You are usually asked to fill in an expression of wishes or "nomination" form to inform them of who you want your pension to go to if this happens - however, many people may have filled this form out years ago and then forgotten about it, so it's important to check that yours is up to date.

You can choose to defer your State Pension to get more

You can boost your state pension by 5.8% for each year you choose to defer it, meaning that someone on the full new state pension would gain an extra £500 if they deferred for one year - you can also defer part of a year. However, there are several things to consider before you do this, as you won't receive it for as long and it could impact how much tax you pay - the MoneySavingExpert website has a helpful guide on whether you should defer your state pension.

Check whether you could be sitting on a lost pension

There's a whopping £27 billion sitting in old pensions, according to MoneySavingExpert. You can use the free Pension Tracing Service to check whether you have any pensions you may have forgotten about over the years - and you might just end up stumbling across tens of thousands of pounds.

You may be able to boost your State Pension for free

If you are a carer, have had a career break, or have had an illness that meant you couldn't work, you could be due National Insurance credits which can boost the amount of State Pension you'll be entitled to. Some people will have to put in a claim for these credits, including grandparents who offer childcare for close relatives - see the MoneySavingExpert guide on free NI credits for more information.

If you don't qualify for these credits but have some gaps in your National Insurance record, you can also choose to buy missing years to potentially boost your State Pension by thousands. If you're aged between 45 and 70, you have until July 31 to buy missing National Insurance years back to 2006 - after this deadline has passed, you can only go back to 2017.

Avoid opting out of auto-enrolment pensions

Millions of workers - around 10% of the UK workforce - have chosen to opt out of their employer's pension scheme after being auto-enrolled. However, Martin warns that this is a "huge mistake", explaining that everyone who is opted in is effectively getting a pay rise as your employer must contribute to your pension savings, giving you extra money for the future that you wouldn't have received otherwise.

Nearly a million pensioners are missing out on Pension Credit

If you're already receiving the State Pension and are on a low income, you may be entitled to Pension Credit for help with your living costs. You can get Pension Credit even if you have other income, savings, or your own home, and you may also be able to get extra help if you're a carer, severely disabled, or responsible for a child or young person.

Pension Credit is often dubbed a "gateway benefit" as recipients are then eligible for other support such as cost of living payments, council tax reductions, housing benefit, and free TV licences. You can check whether you may be entitled to Pension Credit support and make an application on the gov.uk website.

If you're a woman aged 70 or over, you could be due £10,000s back

Hundreds of thousands of women aged 70 or over who are married, divorced or widowed, or women aged over 80 regardless of marital status, are owed huge pay-outs after system errors meant that they were underpaid their State Pension - the average amount is more than £6,000. Women who hit the State Pension age before April 2016 could be affected - the MoneySavingExpert website has a guide to help you determine if you've been missing out.

Don't start taking money out of your pension without getting guidance first

Taking money our of your pension can be "very taxing if you do it the wrong way," Martin warns. He explains that some people end up paying £10,000s more than they need to in tax because they take money out without getting guidance first - always seek advice before taking any money out of your pension.

Be careful cutting your working hours before you retire

Make sure you check the rules of your pension scheme if you're on a defined benefit or final salary pension and are thinking of taking a pay cut by reducing your hours. Some schemes state that it's a percentage of your final salary, meaning that dropping your hours could end up proving costly.

Use this rule to work out how much of your salary you should put into your pension

A good rule of thumb when it comes to your pension is to take your age when you started saving in a pension and half it, Martin says - this is the percentage of your salary that you should aim to put into your pension for the rest of your working life. For example, if you started a pension at age 20, you should aim to save 10% of your salary including your employer's contributions.

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