Millions of Britons could be unknowingly putting their retirement plans at risk through a handful of common pension mistakes, according to a financial expert.
Some of these errors can cost savers tens of thousands of pounds over the course of their working lives, while others could leave people significantly short of the income they expect in retirement.
Sam Robinson, Principal Financial Adviser at Almond Financial, has identified five key pension pitfalls that he says are catching out workers across the UK.
The adviser warned that many people are effectively “sleepwalking” into retirement shortfalls by paying little attention to their pension arrangements until it is too late.
“The earlier people engage with their pensions, the more options and flexibility they tend to have later in life,” Mr Robinson said.
One of the most common mistakes is losing track of workplace pensions built up with previous employers.
As workers move jobs throughout their careers, pension pots can become spread across multiple providers, making it easy to forget what has been accumulated.
“It’s incredibly common for people to forget about workplace pensions from old jobs. Over time, these pots can become scattered across multiple providers and people often have no idea how much money they’ve built up,” Robinson said.
One of the most common mistakes is losing track of workplace pensions built up with previous employers
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GETTYAnother costly error is leaving smaller pension pots sitting in schemes that charge relatively high fees.
According to Mr Robinson, these charges can quietly erode retirement savings over many years without savers realising the impact.
“Small pension pots with high charges can quietly eat away at your retirement savings over the years,” he said.
He added that consolidating multiple pension pots into a more cost-effective arrangement can make retirement planning easier to manage while helping savers keep track of their money.
A third significant mistake sees employees remaining on minimum auto-enrolment contribution levels for their entire working lives without ever reassessing them.
Consolidating multiple pension pots into a more cost-effective arrangement
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GETTY“One of the biggest mistakes people make is treating their pension like a fixed bill that never needs revisiting.
“Even increasing contributions slightly after a pay rise can have a huge long-term impact thanks to compound growth,” Mr Robinson explained.
The fourth pitfall concerns workers who fail to verify whether they are maximising their employer’s contribution matching schemes.
Mr Robinson said: “In some workplaces, people are effectively turning down free money by not maximising employer pension contributions. It’s always worth checking whether your employer will match higher payments.
Assessing pension investments becomes particularly important as retirement approaches
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GettyThe fifth and final pitfall involves workers who never examine how their pension is invested after being automatically enrolled into a workplace scheme.
“A lot of people are placed into default pension funds and simply leave them untouched for years without checking whether they still suit their goals or stage of life,” Robinson said.
Assessing pension investments becomes particularly important as retirement approaches, he added.
Mr Robinson emphasised that modest adjustments made now can yield surprisingly substantial results by the time people stop working.
“People don’t need to become pension experts overnight, but regularly checking in on your retirement savings can prevent years of costly mistakes,” he said, recommending that those uncertain where to begin should consult an independent financial adviser.