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The Independent
19 hours ago
- Business
- The Independent
5 pension mistakes you might be making now that will cost you later
Pensions can often be a topic that people don't think about much, or feel the importance to take time to research. Lisa Picardo, chief business officer for PensionBee in the UK – where they help customers to consolidate pensions, contribute and withdraw with ease – says that it is 'never too late to get on top of your pensions'. ' People do engage with their pensions at different points and for different reasons,' Picardo says. 'It's always a great idea to engage with your pension, because taking those proactive steps to consolidate and to engage now typically will lead to better retirement outcomes.' As the idea of pensions often go to the back burner of people's minds, there may be some common and simple mistakes being made that could effect their future. We spoke with pension and finance experts to explain what some of these may be. Losing track of your hard earned pension costs Picardo says people loosing track of their pension costs is 'really big' and 'surprisingly very common.' 'This is not just about forgetting where your money is or even losing it altogether, but it's about missing out on the opportunity to manage these savings effectively and achieve a better retirement outcome,' she says. 'The mistake that people make is that they essentially lose sight of their pensions because most of us are going to accumulate many pension pots over our careers due to the auto enrolment function here in the UK, which means that every time you start a new job, you get a new workplace pension. 'With more and more frequent job switching, people are going to amass a number of pensions over their lifetime. Our research shows that there are around 4.8 million pension pots that are now considered lost in the UK – that is one in 10 people who think they've lost a pot. 'Bringing all your pension pots together is therefore a great solution. It puts you in control of your financial future, helps to reduce the risk of forgotten or lost pots, helps to potentially cut down on fees and overall makes it easier for you to manage your savings.' Not taking advantage of employer contributions 'Under auto enrolment, if you're eligible and don't opt out, your employer contributes to your pension which is essentially free money, along with the tax relief you receive,' Claire Trott, head of advice at St. James's Place says. 'Many employers also offer 'matching,' where they'll increase their contributions if you do. Failing to take advantage of this is like turning down part of your salary, as there's usually no alternative benefit offered in exchange.' Not making the most of your contributions 'It is very easy to put pension saving on the back burner,' Picado says. 'Especially when you are faced with other pressing financial priorities. However, if you delay or don't contribute to your pension, it can significantly impact your pots' growth over time. 'Many people don't contribute enough or don't start early enough and therefore, they don't really have the benefit of compound growth which is sort of like magic. Even small increases can make a world of difference. 'Therefore to solve this, you should do what you can, when you can. Start contributing early. If you can't commit to it fully, do it flexibly. A lot of people take the opportunity when they're doing a tax return once a year to have a look at what additional contributions they could be making.' Trott adds: 'I often suggest when you get a pay rise, consider putting half into your pension, your take home pay still increases, and you're investing in your future.' Claiming higher or additional rate relief 'If you're a higher or additional rate taxpayer contributing to a personal pension, you may be entitled to extra tax relief but you won't receive it automatically,' Trott says. 'You can claim through your Self Assessment tax return or by contacting HMRC directly to adjust your tax code. For regular contributions, one call is often enough. Just remember to flag any one-off payments clearly so HMRC doesn't apply the change to future years in error.' 'What we see when markets are turbulent is a lot of people feel worried about savings and act impulsively,' Picado says. 'They may withdraw funds or switch investments during a downturn, thinking that it will minimise their loss or protect their money. However, this can put you in a position where you actually do more harm than good. 'What happens here is they are crystallising that loss and lose the ability to recover as the markets rebound. Similarly, withdrawing too much once you reach pension access age can be a mistake because you can run out of money in later life. 'Therefore, when you do come to withdraw, you have to make sure that you are future-proofing and not taking too much in one go. If you are in drawdown and there is market volatility, try to ensure that you have some cash reserves or an emergency fund handy so you can draw on that. This can really help to ride out market storms without having to either sell investments or take too much at the worst possible time. 'Pensions are long-term investments and are very much designed to weather the storm over the long term.'
Daily Record
17-06-2025
- Business
- Daily Record
New calls for ‘universal pension' to ensure every person in work saves for retirement
More than a million 'invisible' workers cannot afford to save for their retirement. The latest data from PensionBee, a leader in the consumer retirement market, reveals that over half of temporary economy workers in the UK (57%) cannot afford to save into a pension. This has prompted urgent calls for a 'universal pension' system that would ensure every worker - regardless of income level, employment status or hours worked - has automatic access to a pension. The findings mark the launch of PensionBee's 'Invisible Worker' campaign on National Freelancers Day (June 17), which aims to shine a spotlight on the millions of non-traditional workers, from freelancers and unpaid carers to those on zero-hours contracts, who are falling through the cracks of the UK pension system as a result of not being auto-enrolled. The nationally representative survey of 1,000 UK adults who either aren't paying into, or don't know if they're paying into a pension, found that affordability is the main barrier across all types of non-traditional work. Some 60 percent of self-employed and freelance workers who aren't paying into a pension cited affordability as the key reason, followed closely by unpaid carers (57%) and those on zero-hours contracts (46%). Beyond cost, a significant proportion of workers in the gig economy simply don't know how to begin saving into a pension. Nearly one in three (29%) say they wouldn't know where to start or they find pensions too complicated, a figure that rises to 32 per cent among unpaid carers. Calls for automatic access to pensions In response to these barriers, nearly 70 per cent of all respondents said that pensions should be made automatically available to every worker regardless of income, employment status, or hours worked. This support for universal pension inclusion suggests a strong public appetite for reform. The experience of exclusion More than one in three (35%) respondents have at some point in their career felt excluded or unsupported by the pension system due to the nature of their work. This sentiment was particularly pronounced among self-employed and gig economy workers, underscoring a systemic mismatch between modern work patterns and pension models. A call for change The findings come as policymakers and providers consider how to make long-term saving more accessible to a wider range of workers. PensionBee is calling for reforms that prioritise simplicity, affordability, and broader eligibility to ensure that no one is left behind in planning for retirement. Lisa Picardo, Chief Business Officer UK at PensionBee said: 'It's time for a pension system in the UK that reflects the realities of modern working life and the creation of a 'universal pension' that includes millions of our nation's invisible workers. 'Too many people working hard outside traditional employment structures are being left behind by the current pension system, and are facing the very real risk of a poor retirement outcome with heavy reliance on the State Pension. When more than half of gig workers say they simply can't afford to save for retirement, this stops being a personal finance issue and becomes a systemic failure.' Ms Picardo added: 'The message from the public is clear: they want a pension system that works for everyone, not just those in secure, salaried roles with employer contributions. We need a safety net that catches everyone, especially those who will be most in need in later life. Automatic access to pensions, regardless of income, hours or employment status, is the next logical step towards a fairer future. 'Retirement should not be a luxury. It's a right earned through a lifetime of contribution - whether through freelance work, self-employment or unpaid care.'
