5 Pension Mistakes to Avoid
Pensions are the foundation of retirement planning but are unfortunately one of the least understood financial products. Pension education in the UK is often limited. Consequently, many pension savers risk making costly errors with their funds. Here, we will outline five common pension mistakes that you should avoid
1) Relying on “Default” Investments
Your workplace pension scheme will have a default investment option that all new scheme members will be invested in. This middle-risk investment option may not be the best option for your pension savings, may not invest in the things you care about, and may impact the final value of your pension. Reviewing your default investments and looking at alternative options is often a good idea.
2) Under Saving
Individuals often underappreciate the pension value they require to live the retirement they dream of. Although Auto-Enrolment legislation has had a positive impact on encouraging pension saving, people often stick to the minimum contribution levels throughout their careers. Increasing your contributions slightly, particularly early in your career, can have a massive impact on the final value of your pension.
3) Losing Pensions
It is increasingly uncommon for people to stay with one employer throughout their working lives. Each time you change employer you will be enrolled into a new pension with that employer. If you change jobs frequently and regularly move around for work, your old pension providers may lose track of you. Therefore, you should keep a record of your different pensions (providers and plan numbers) and seek to keep your address updated with all of them.
Click here for more information on how to find lost pensions.
4) Pension Scams
Equally, Pensions can also be lost due to scams. Pension Scams have been on the rise since the pension freedoms were introduced in 2015. Anyone could be the target of the scam, and the impact on your life and retirement plans can be catastrophic.
Click here for more information on pension scams.
5) Going It Alone
Pensions can be complex financial products. People often tackle pensions without seeking advice or guidance. However, there are numerous sources of information available, such as Pension Wise (the Government’s free pension help scheme for those over 50s). Or you can speak to a qualified financial adviser to help stop making these pension mistakes.