Savers mostly 'in the dark' about when they can retire - how to get your pension on track

Thanks to auto-enrolment, many people will rarely think about the regular pension contributions they make. However, new research has highlighted just how many people aren't aware about where their pensions are invested.

Women, the self-employed, single people, and lower earners are most likely to be in the dark about pensions, Hargreaves Lansdown said.

Commenting on the research, Nathan Long, senior analyst at Hargreaves Lansdown, said: "Your pension is one of your biggest assets – and will likely be the deciding factor in how luxurious your retirement is – and yet so many people are confused and baffled by them.

"Most savers are in the dark when it comes to knowing how much they have squirreled away in pensions, what they’re invested in and when they can retire.

"They’re equally unsure what their retirement options are, and how much income they’ll need to live on when they finish work.

"But ignorance is not bliss.

"If you don’t get your head around pensions, you could pay a terrible price for it in your golden years. Think baked beans retirement, not smoked salmon retirement.

DON'T MISS

"The good news is that getting to grips with pensions is simpler than you think."

Mr Long went on to signpost some places people can head to for more guidance on their pensions.

"There’s plenty of information out there, from providers, your employer, or organisations like the Money Advice Service or the Pensions Advisory Service," he said.

"Once you know how much you’ve got and when you’d like to retire, you can think about upping your monthly contributions or changing your investment strategy.

"Alternatively, some people consider that given the amount of money involved and what’s at stake, this is one of the times in life when it’s worth paying for advice.

"But whatever you do, don’t put it off – the sooner you shine a light on your pension pots, the quicker you’ll be out of the dark and on your way to securing the retirement you deserve.”

The analyst also put forward seven suggestions for getting a pension "on track".

1. Find your pensions

"Hunt down your pensions," he said.

"Check providers have your up-to-date details and correct address. Get online access set up on your pension pots, which will make it easier to monitor them.

"Think you may have lost one? Use the government’s free Pension Tracing Service."

2. Contribute more

"If you’re employed, ask your company whether it’ll match any extra contributions you pay in.

"If the answer is yes, it’s a no-brainer – not paying in more means you leave extra salary on the table.

"If the answer is no, just finding an extra £50 a month to put into your nest egg could pay serious dividends in retirement."

3. Check your investments

"Think about how much risk you’re prepared to take; this will help you decide the kinds of investments that should go into your pension.

"There may be a default fund, which is normally a mix of shares, bonds and cash. There will be other options too, such as emerging markets, ethical investments and property, so have a look at those (including fees)."

4. Get free help

"There’s lots of information online about how pensions work, including from providers like HL, but also The Money Advice Service and the Pensions Advisory Service.

"If you’re 50 or over, you can get free impartial guidance from Pension Wise. Even if you just use it as a second opinion, getting an hour with someone from Pension Wise could be really worthwhile."

5. Consider consolidating

"Combining your pension pots will make it easier to keep track of them. It’ll minimise the admin and paperwork, and could reduce the fees too.

"Remember to check that you’re not giving up any valuable benefits, and most people should avoid transferring a final salary scheme."

6. Review each year

"Set a date in your diary to check your progress – it’s a good habit to check in at least once a year.

"When you do, check how the investments are doing and if they are still right for your circumstances, plus have a think about whether you can increase your contributions."

7. Don’t forget other options

"A pension is not the only way to save for old age. Basic-rate taxpayers and the self-employed may find they get the biggest tax boost with a LISA, not a pension.

"You have to be under 40 to open one, so if that’s you, take a closer look at the product to decide if it’s right for you – before you’re too old (and it’s too late)."