Explore how we help
We create a plan tailored to your complex needs
WHO WE HELP
Individuals and families
Your wealth, goals and family priorities
Business owners and entrepreneurs
Your business, wealth and next steps
Corporate executives
Complex income, equity and career transitions
International individuals and families
Life and wealth across multiple countries
UHNW and Family Offices
Significant, complex and multi-generational wealth
YOUR IDEAS & GOALS
Plan for growth
Grow your wealth and open up new opportunities
Live well
Live life to the fullest, today and into the future
Secure your future
Be prepared for whatever may happen
Make a difference
Support the people and causes you care about
WORKING WITH PROFESSIONALS
Intermediaries
Scale, security and investment discipline for your clients
Professional partners
Specialist support to enhance your client offering
Charities
Effective governance, oversight and long-term sustainability
About RBC Wealth Management
Experienced local advisers, backed by global strength
Our offices
Over 30 offices in the UK, Ireland and Jersey
WHO WE ARE
Our history
Generations of clients have relied on RBC Wealth Management and RBC Brewin Dolphin
Awards and recognition
Recognising our service and industry leadership
Leadership
The people guiding our strategy and client experience
SUSTAINABILITY
Responsible investing
Our approach to responsible investment
Community involvement
Supporting communities where we live and work
CAREERS
Work with us
You can thrive here
Diversity and inclusion
Our differences make us stronger
Search careers
Find your opportunity
Explore our solutions
Let’s set your ideas in motion
RBC Private Wealth
Integrated solutions for significant and complex wealth
RBC Brewin Dolphin
Personalised financial planning and investment advice
Brewin Portfolio Service (BPS)
Simple, guided investing through an online platform
RBC International Trusts
Specialist structures for long-term wealth preservation
OUR CORE SOLUTIONS
Wealth planning and management
A bespoke plan to manage and grow your wealth
Investment management
Tailored portfolios aligned with your goals
Pensions and retirement planning
Plan for the retirement you want
Inheritance tax and estate planning
Helping you pass on more of your wealth efficiently
UHNW and Family Office services
Coordinating complex and multi-generational wealth
Banking
Dedicated banking for your personal and global needs
Financial advice for business owners
Guidance for growth, exit and managing proceeds
Responsible and sustainable investing
Invest with greater purpose in line with your values
Philanthropy
Create a lasting impact through strategic giving
Trusts and foundations
Protect and preserve wealth for future generations
Self-directed investing
Choose from a range of ready-made portfolios
Explore our insights and ideas
Analysis, insights and research from our local and global networks
Our newsletter
Subscribe to receive email updates on news, insights and upcoming events
Quarter-century crossroads
Key themes have the potential to shape economic developments and drive certain sectors for decades to come.
Life reimagined: The biotech revolution and longevity
There’s more to a long life than simply a long lifespan. The number of years we spend in good health, or healthspan, is key. With biotech spurring promising medical innovations, we look at how it can fit into investment portfolios.
ADDITIONAL RESOURCES
Insights
Articles exploring the events and trends driving the world and your wealth
Market perspectives
Expert analysis and commentary on current market trends
Case studies
Real experiences showing how we turn ideas into action
Guides
Practical information to help you make informed decisions
Webinars
Conversations with our experts on the topics shaping wealth today
From valuable tax relief to avoiding ‘lifestyle inflation’, discover why putting your pay rise in a pension makes sense
10 February 2023 | 5 minute read
When you get a pay rise, you might be tempted to splurge your extra cash on upgrading your lifestyle. But you could treat yourself in another way by diverting additional income to your pension. Admittedly, this sounds like the more boring option, but it could make a huge difference to your plans for the future.
Jam-packed with essential information on how to enjoy a more comfortable life after work.
Download now
There’s a common misconception that if you’re a member of a workplace pension scheme, your pension contributions will automatically increase in line with your pay rise. But this isn’t always the case. To ensure your extra income goes towards boosting your long-term savings – and not on shoes, expensive takeaways and lunch out – you might need to take a more proactive approach.
First, a quick explanation of the way workplace pension contributions actually work. Some employers base contributions on a percentage of your total salary, which means the amount you pay into your pension increases as your salary rises.
If you’re in an auto-enrolment pension scheme, however, contributions are based on a percentage of your ‘qualifying earnings’, which are £6,240 to £50,270 in the 2022/23 tax year. This means that once your salary exceeds £50,270, your pension contributions remain static. It’s really important to check which type of workplace pension you’re paying in to.
Let’s imagine you’re on a salary of £55,000, are a member of an auto-enrolment scheme, and pay 5% of your qualifying earnings into your pension. Each month, you would make a £183.46 pension contribution and receive an estimated take-home pay of £3,302.381. If your salary increased to £60,000, your pension contribution would remain at £183.46, whereas your estimated take-home pay would increase to £3,544.04 – that’s an extra £241.66 in your pocket every month.
It might be tempting to keep this cash for little luxuries, but putting it in a pension could increase its value by a huge 20-45% because of the tax relief you’ll receive. This could make a big difference to your future.
Here are three reasons why you could consider putting your pay rise in a pension.
The reason why pensions are so powerful for longer-term savings is that personal contributions benefit from tax relief. When you pay into a pension, the government tops up your contribution by 20%, meaning a £100 contribution only costs you £80. If you’re a higher or additional rate taxpayer, that £100 contribution would only cost you £60 or £55, respectively.
Pensions are a highly tax-efficient way of growing your investments. This ensures more of your money goes towards your goals, boosting your chances of a secure financial future.
You might think a substantial pay rise will set you up for life, but earning more money doesn’t necessarily equate to greater long-term wealth.
This is because of something called ‘lifestyle inflation’. When people earn more money, the temptation is to buy more expensive things rather than save the extra cash. So-called ‘lifestyle upgrades’ could include eating out more often, switching to more expensive branded products, or buying a new car. Over time, it can translate into stagnant savings and difficulty reaching financial goals.
Although eating out might make you feel happy at the time, at the end of the month you’ll have saved no more money than you had previously. In fact, the only thing that might have increased is your waist band! It’s understandable to want to enjoy your pay rise, but paying extra income into your pension could have a much more lasting impact on your overall happiness and financial wellbeing.
If you don’t invest your extra income, it could end up sitting in your bank account. The interest rates on cash tend to be below the inflation rate. Inflation erodes the purchasing power of your money, meaning it could lose its real value over time.
So, while you might not actually be spending your money, after ten years you could find that it is worth less than at the start. And you may wish you’d got those extra takeaways after all.
So long as you have built up emergency cash savings, investing your extra income in the stock market will give it the chance to increase in value over time. Although the stock market goes up and down, history shows it tends to perform better than cash and rise above inflation over long periods.
You can’t access money in a personal pension until you reach age 55 (57 from 2028). Yet many people choose to leave their pension money untouched for much longer than this – at least until they retire. This will give your investments the opportunity to grow over many decades into what could be a very large pot of money.
Taking control of your finances can feel daunting and, let’s face it, not hugely interesting. But the impact it can have on your long-term financial wellbeing makes it well worth doing, and it’s not something you want to get wrong. Taking some really good financial advice could make a real difference to you and your plans for the future. So why not speak to one of our financial advisers today?
1 https://www.thesalarycalculator.co.uk/salary.php
The value of investments, and any income from them, can fall and you may get back less than you invested. This does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Information is provided only as an example and is not a recommendation to pursue a particular strategy. Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.
Sign up to our newsletter for expert insights on investing for the future, saving for retirement, passing on assets to the next generation, and much more.
Subscribe
This publication has been issued by RBC’s Wealth Management international division in the United Kingdom and the Channel Islands which is comprised of an international network of RBC® companies located in these jurisdictions and includes RBC Europe Limited and Royal Bank of Canada (Channel Islands) Limited. You should carefully read any risk warnings or regulatory disclosures in this publication or in any other literature accompanying this publication or transmitted to you by RBC’s Wealth Management international division.
This publication has been compiled from sources believed to be reliable, but no representation or warranty, express or implied is made to its accuracy, completeness or correctness. All opinions and estimates contained in this report are judgements as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. This report is not an offer to sell or a solicitation of an offer to buy any securities. Past performance is not a guide to future performance, the value of investments and income arising can go down, future returns are not guaranteed, and an investor may not get back the amount originally invested. Countries throughout the world have their own laws regulating the types of securities and other investment products and services which may be offered to their residents, as well as the process for doing so. As a result, any securities or services discussed in this report may not be eligible for sale in some jurisdictions. This report is not, and under no circumstances should be construed as, a solicitation to act as a securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. Nothing in this report constitutes legal, accounting or tax advice or individually tailored investment advice.
This material is prepared for general circulation and does not have regard to the particular circumstances or needs of any specific person who may read it. The investments or services contained in this report may not be suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about the suitability of such investments or services. To the full extent permitted by law none of the entities which comprise the international division of RBC Wealth Management nor any of their affiliates, nor any other person, accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. No matter contained in this document may be reproduced or copied by any means without the prior consent of RBC Wealth Management.
Clients of RBC Europe Limited may be entitled to compensation from the UK Financial Services Compensation Scheme (FSCS) if it cannot meet its obligations. This depends on the type of business and the circumstances of the claim. For further information about the compensation provided by the FSCS scheme (including the amounts covered and eligibility to claim) please refer to the FSCS website FSCS.org.uk. Please note only compensation related queries should be directed to the FSCS. Royal Bank of Canada (Channel Islands) Limited is not covered by the UK Financial Services Compensation Scheme. RBC Europe Limited is registered in England and Wales with company number 995939. Its registered office is 100 Bishopsgate, London EC2N 4AA. RBC Europe Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Royal Bank of Canada (Channel Islands) Limited (“the Bank”) is regulated by the Jersey Financial Services Commission in the conduct of deposit taking, fund services and investment business in Jersey. The Bank’s general terms and conditions are updated from time to time and can be found at https://www.rbcwealthmanagement.com/en-uk/terms-and-conditions. Registered office: Gaspé House, 66-72 Esplanade, St. Helier, Jersey JE2 3QT, Channel Islands. Deposits made with Royal Bank of Canada (Channel Islands) Limited in Jersey are not covered by the UK Financial Services Compensation Scheme. Royal Bank of Canada (Channel Islands) Limited is a participant in the Jersey Bank Depositors Compensation Scheme (the Scheme). The Scheme aims to provide protection for eligible depositors of up to £50,000. For further information about the Scheme and to understand your eligibility, please refer to www.jrdca.org.je/jdcs.
Investment services offered by the Bank are not covered by an investor compensation scheme as there is currently no such scheme operating in Jersey, however ‘eligible deposits’ held pursuant to investment services may be protected under the Bank Depositors Compensation Scheme described above – for more information see the Bank’s general terms and conditions. Some of the products that the Bank might recommend to you could be registered overseas and may be covered by a local compensation scheme. Your investment counsellor will provide you with the details of any overseas compensation schemes (where applicable) at the time of making an investment recommendation.
Copies of the latest audited accounts are available upon request from the registered office. ® / ™ Trademark(s) of Royal Bank of Canada. Used under licence.
We’ll help you prepare for the future and meet your goals with a solid financial plan that’s tailored to you.