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Most of us are used to seeing a chunk of our earnings disappear into our pension every month, but we may not always have a clear idea of where this money is invested, how much we’ve built up, or whether we’re on track for the retirement we want.
Whether retirement is a decade or more away or just around the corner, taking a little time to review your pension now could help boost your retirement income and put you in a stronger financial position.
Here are three simple steps to help you get the most from your pension.
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If you’re considering seeking professional financial advice on the options available to you, we’ve partnered with nationwide Chartered independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial adviser. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 2,600 reviews on VouchedFor, the review site for financial advisers.
1. Prepare: Know what you've got
When we think about our pensions, we often just think about the one we’re paying into now. However, many people have several pension pots from previous employers and don’t know how much they’ve saved altogether.
If you think this could apply to you, it’s worth jotting down a list of the various companies you might have worked for over the years, and whether you paid into a pension scheme while you were employed there. Your next step should be to dig out your latest pension statements for each of these, so you can see an approximate value of your savings held in each pension.
If you think you have a pension that you’ve lost track of, or you can’t find the paperwork for, find out where to go for help in our guide Tracing lost pensions – How to find my old pensions.
Check what you’re paying
Once you’ve located all your retirement savings, check how much you’re being charged by each provider for managing your money.
You should be able to find this information by checking your provider’s website or logging into your online account if you have one. Pension charges should also be listed in your annual statement and the documents you received when you opened your pension. If you still can’t find them, contact your provider directly.
Even small fees can have a significant impact on the value of your pension over time, as they reduce the amount of money that remains invested and benefits from compound growth.
The main cost to look for is the annual management charge (AMC). This is the fee your provider charges for running your pension, including administering your account and managing your investments.
As a general rule, older pension schemes tend to have higher charges than newer ones. Some legacy pensions still charge close to 2% a year, which can substantially reduce your retirement savings over the long term. You can find out more in our article What pension charges am I paying?
Could consolidating be right for you?
If you have lots of different pension plans, and some with higher charges than others, you might want to consider consolidating them. Moving your savings into one plan can make your retirement savings much easier to monitor as it means less paperwork to keep track of.
Before combining pensions, however, it’s important to check whether any of your existing plans have valuable benefits that you could lose. These might include guaranteed annuity rates, protected tax-free cash, or other special features.
For example, if you have a defined benefit pension, this will usually provide a valuable guaranteed income in retirement that you’re unlikely to be able to replicate through a defined contribution pensions, where the amount you end up with at retirement depends on how your investments have performed and how much you’ve contributed. Learn more in our article Should I transfer my pension?
Mike Ambery, Retirement Savings Director at Standard Life, said: “If you’ve changed jobs over the years, you may have built up several relatively small pension pots. Bringing them together could make your savings easier to manage, help you see the full picture in one place, and reduce the risk of losing track of money you’ve worked hard to save. However, consolidation isn’t right for everyone and it’s important to check whether you could lose any valuable benefits or guarantees before making a decision.”
Nominate beneficiaries
An important part of getting your retirement savings in order is to make sure you’ve let your provider know who you want your pension to go to in the event of your death.
Unlike other assets, pensions don’t usually pass to your beneficiaries under the terms of your will, so completing this form is an important part of your estate planning. It’s therefore important to complete what’s known as an ‘expression of wishes’ form. This is provided by your
pension provider and tells them who you’d like to receive your retirement savings if you die.
Although it’s not legally binding, pension trustees will usually take your wishes into account when deciding who should receive your pension benefits. You should review your expression of wishes regularly, especially after major life events such as getting married, divorced, or having children, to make sure it’s up to date. Read more in our article What is a pension expression of wishes?
2. Plan: Check whether you're saving enough
Once you’ve got a clear idea of where your retirement savings are and how much you have, you need to think about when you’re likely to be able to afford to retire, and also how much you’re going to need to fund the type of retirement you want.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “Retirement means different things to different people. You may want to travel the world or spend time with loved ones. Having an idea of what you want your retirement to look like can help you work out how much income you might need.”
There are plenty of pension calculators available to help you work out how far your retirement savings might stretch. For most of these to work properly, you’ll need to input your annual income, the current value of your pension pot, and the amount you and your employer contribute to your pension each month to hand.
Bear in mind that no retirement calculator can predict the future with complete accuracy. Factors such as investment returns, inflation, earnings growth and future changes to the State Pension can all have a significant impact on how much you’ll have to live on in retirement. Instead, these tools are designed to give you an estimate and help you consider whether you might benefit from increasing your pension contributions (if you can afford to), whether your expected retirement income is likely to meet your needs, or whether retiring later could be worth considering.
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If you’re considering seeking professional financial advice on the options available to you, we’ve partnered with nationwide Chartered independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial adviser. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 2,600 reviews on VouchedFor, the review site for financial advisers.
Boost pension contributions if possible
Most people who belong to their employer’s pension scheme only make the minimum contributions required under auto-enrolment rules. These require that the minimum total contribution is generally 8% of qualifying earnings, made up of at least 3% from employers, with employees making up the difference and receiving tax relief from the Government. Auto-enrolment was introduced in 2012 to help tackle the UK’s pension savings gap by encouraging more people to save for retirement.
If you’re able to pay in more than the auto-enrolment minimum limits, this could potentially make a significant difference to your future retirement income, especially if your employer is prepared to match any additional contributions you make.
Mr Ambery said: “If you’re expecting a bonus, paying some or all of it into your pension can be a tax‑efficient way to give your retirement savings a boost, without affecting your monthly take‑home pay. You may be able to reduce income tax and National Insurance at the same time.
“Similarly, if you’re due a pay rise, salary sacrifice – where you agree to give up part of your salary in return for a higher pension contribution – can be a simple way to increase your savings while reducing the tax you pay overall. It’s worth being aware that the government has announced plans to limit the NI exemption for salary pension contributions to £2,000 a year from 2029, but there are no changes for now.” You can find out more about salary sacrifice in our article What is salary sacrifice?
The importance of tax relief
One of the biggest benefits of saving into a pension is the tax relief you receive from the Government, so every extra pound you can pay in will boost the overall amount you end up with.
For example, if you’re a basic-rate taxpayer and pay £80 into your pension, the Government adds £20 in tax relief, meaning £100 is invested. Higher and additional-rate taxpayers can usually claim further tax relief on their contributions through their Self Assessment tax return, making pension saving even more tax efficient. Find out more about this in our guide Are you missing out on thousands in pension tax relief?
In the 2026/27 tax year, you can usually receive tax relief on pension contributions of up to £60,000 or 100% of your earnings, whichever is lower, and you can continue benefiting from tax relief until the age of 75. Learn more in our guide How does pension tax relief work?
3. Prosper: make your pension last
Retirement is when your pension changes from something you’re building up into something you rely on for your income. Making sure your money is invested appropriately can help ensure this income lasts.
This is particularly important if you’re relying on drawdown for your retirement income. Unlike an annuity, where you exchange your pension pot for a guaranteed income, drawdown leaves your money invested while you take withdrawals. This means your investments need to have the potential to grow over the long term, but they must also be managed carefully to reduce the impact of market falls, particularly in the early years of retirement.
Many people using drawdown keep a mix of investments, cash and other savings to provide them with flexibility and help them manage risk. Holding some money in cash can provide a buffer for short-term spending and unexpected expenses, allowing you to avoid selling investments during a market downturn, while longer-term savings can remain invested to support future income needs. The right balance will depend on your circumstances, including your retirement plans, attitude to risk, and how much income you need from your pension.
Find out more in our guides Where should I put my retirement savings? and Where is my pension invested?
Plan withdrawals carefully
It’s important to have a plan for how much you withdraw. Taking too much too soon could leave you with less money later in retirement, particularly if your investments fall in value or you live longer than expected.
A sustainable withdrawal strategy is about finding the right balance between enjoying your retirement now and making sure your money lasts for the remainder of your life. This could mean keeping an eye on your spending, being prepared to adjust how much you withdraw during periods of market uncertainty, and checking that your investments still match your needs and circumstances.
Don’t settle for the first annuity you’re offered
If you’re considering using some or all of your retirement savings to buy an annuity so that you have a guaranteed income in retirement, make sure you compare rates from several different providers first.
You should also make sure that you pick the right kind of annuity for you, especially as an annuity is a once-in-a-lifetime purchase. For example, you can choose an annuity which offers an inflation-linked income, or you might decide to add death benefits for your loved ones.
Alternatively, if you have any kind of long-term health condition, such as high blood pressure or heart disease, you may want to buy what’s known as an ‘impaired life’ or ‘enhanced’ annuity which will provide you with a higher level of income than a standard annuity. Read more in our guide Annuities Explained.
A final thought…
You don’t need to become a pensions expert to improve your retirement prospects. Spending just a few hours reviewing your pension, checking your contributions and making sure your money is invested appropriately could make a big difference to the income you’ll have in later life.
If you’re not comfortable going it alone, then you may want to seek professional advice on the best way to ensure your money is working as hard as it possibly can for you.
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If you’re considering seeking professional financial advice on the options available to you, we’ve partnered with nationwide Chartered independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial adviser. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 2,600 reviews on VouchedFor, the review site for financial advisers.
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