If retirement is on the horizon, and you’re not quite sure whether your finances are ready for such a big change, it’s probably time to start paying your pension some serious attention.
You might already have a clear vision of your life after work, whether that involves travel, downsizing, or simply having more time to dedicate to your hobbies and interests. Whatever your retirement goals, it’s worth checking that your savings are aligned with them, and that usually means carrying out a thorough review of your pensions.
Here are five compelling reasons to bring your pension plans under the spotlight now.
If you’re considering seeking professional financial advice on the options available to you, we’ve partnered with nationwide independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial advisor. 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 2,000 reviews on VouchedFor, the review site for financial advisors.
1) Are your goals achievable?
Lots of us put off thinking about our pensions until the last minute, because markets fluctuate so frequently. When you’re 10‑15 years away, investment losses matter less – there’s time to recover. But when you’re two or three years from retirement, preserving capital matters just as much as growing it. A review can help ensure your goals remain both realistic and achievable.
What seemed right five – or even ten – years ago might now expose your savings to more risk than you’d like, or leave them playing too conservatively if you still have a few years until you retire.
As you move closer to retirement, it often makes sense to move investments away from equities and toward more stable options. A review will enable you to rebalance (or de-risk) your portfolio so it better reflects where you are now, not when you first started. You can find out more in our guides Where is my pension invested?, How much cash should you hold in your pension? and What is pension lifestyling?
2) Fees may be eating into your growth
Annual charges compound over time, which means that they can shave tens of thousands off your pension savings, reducing the amount of income you’ll receive in retirement.
Not all funds cost the same, so it’s worth checking exactly how much charges are costing you. For example, you may be in a default workplace scheme with higher management charges, or a historical personal pension scheme that’s no longer competitive.
A review can highlight if you might be better off transferring to a lower‑cost provider offering similar returns (although it’s important to bear in mind that past performance is not an indicator of how a fund will perform in future). Learn more about the impact of charges on your retirement savings in our article What pension charges am I paying?
3) You might be missing out on tax breaks
Pension allowances and tax breaks are currently generous, but can be difficult to get to grips with. However, if you don’t take time to understand them, you risk missing out on opportunities to maximise the amount you can shelter in your pension.
Everyone in the UK enjoys tax relief on their pension contributions, with the amount of pension tax relief you can claim tied to your rate of income tax. Most UK taxpayers automatically get tax relief on pension contributions at the basic rate of tax, which is 20%. So, if you wanted to add £100 to your pension, you’d only need to pay in £80, as the government would add the £20 it took in income tax.
If you’re a higher or additional rate taxpayer who pays income tax at a rate of 40% or 45%, you can claim an additional 20% or 25% pension tax relief back. In other words, you can effectively pay £100 into your pension for only £60 if you’re a higher rate taxpayer or £55 if you’re an additional rate taxpayer. You can find out more about tax relief in our guide How does pension tax relief work?
Bear in mind that you’re only entitled to tax relief on a certain amount of pension contributions each tax year, known as your Annual Allowance, which for the 2025/26 tax year is £60,000. However, if you haven’t made full use of your allowances in the previous three tax years, you may be able to pay more than your annual allowance into your pension under ‘carry forward’ rules. It’s worth noting that you cannot receive tax relief on contributions in excess of your earnings in any tax year, even using the carry forward. For example, if you earn £40,000 in a tax year, you can only contribute up to £40,000 to your pension that year, including any carried forward allowance. Find out more in our article How does pension carry forward work?
A review can ensure you’re making the most of tax relief and allowances, and that you won’t fall foul of current rules by paying more than you’re allowed into your pension.
4) You may be sitting on multiple pots
If you’ve had multiple jobs over a lifetime, this can mean you have multiple pension pots, some of which you might have forgotten about, or some of which could be underperforming. Gathering them together can potentially save on charges, reduce paperwork, and give you a clearer picture of your total pension wealth, but it won’t always be the right decision.
Some older pensions – especially final‑salary schemes – come with valuable guarantees and so shouldn’t be transferred. A proper review ensures that consolidating pots won’t cost you more than it gains you.
Helen Morrissey said: “Once you’ve tracked down your pensions, you might want to consolidate them. Having an overarching view can give you a proper sense of what you have and help you make more informed retirement choices.
“For instance, if you had a couple of tiny pots, you might be tempted to take them as cash and spend them. If you have one larger pot, you will be less likely to do this. It can also save you time as you’ll have less admin and could save you money. However, be careful before you consolidate. Make sure you aren’t incurring expensive exit fees on older pots. You may also be missing out on valuable benefits like guaranteed annuity rates.”
Find out more about consolidating pensions in our guides Should I consolidate my pensions? and Managing multiple pensions: what are your options?
5) Your options at retirement are flexible, but can be complicated
Annuity, drawdown, taking tax-free cash, partial withdrawals – there are all sorts of different options available when it comes to how you draw an income from your pension.
The right mix for you will depend on your attitude to risk, whether you have any medical conditions, and whether you prefer a guaranteed income or more flexibility. A review can unlock the right approach for you, balancing income needs, retirement goals, and your approach to risk.
You might discover that a mix-and-match approach is right for you. For example, you might want to use some of your pension savings to buy an annuity to cover your basic costs in retirement that your State Pension won’t cover. You could then leave your remaining savings in drawdown to dip in and out of as when you need to supplement your income.
You can learn more about your options at retirement in our guides Annuity vs drawdown: which is right for you?, Should I take a tax-free lump sum from my pension? and Approaching retirement? Here’s what you can do with your pension.
If you’re considering seeking professional financial advice on the options available to you, we’ve partnered with nationwide independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial advisor. 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 2,000 reviews on VouchedFor, the review site for financial advisors.
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