Millions of workers losing money on their pensions every month

From forgotten workplace pensions and missed employer contributions to failing to increase savings after a pay rise, experts say many people are “sleepwalking” towards a retirement shortfall without realising it.

And while each mistake may seem relatively minor in isolation, the long-term impact can be significant when compounded over decades.

1. Forgetting about old workplace pensions

Changing jobs is now a normal part of modern working life, but many employees lose track of pension pots accumulated with previous employers.

Over time, workers can end up with retirement savings spread across multiple pension providers, making it difficult to keep tabs on exactly how much they have saved.

Sam Robinson, principal financial adviser at Almond Financial , says: “It’s incredibly common for people to forget about workplace pensions from old jobs. Over time, these pots can become scattered across multiple providers and people often have no idea how much money they’ve built up.”

Industry estimates suggest billions of pounds are currently sitting in lost or unclaimed pension pots across the UK.

2. Leaving pension pots trapped in expensive schemes

Many workers assume all pension schemes perform in a similar way, but fees and charges can vary significantly between providers.

Even relatively small annual charges can reduce retirement savings over the long term, particularly when they are applied over decades.

Mr Robinson added: “Small pension pots with high charges can quietly eat away at your retirement savings over the years. In some cases, consolidating pensions into a better-value scheme can make managing your retirement savings much easier.”

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3. Sticking to minimum pension contributions forever

Auto-enrolment has helped millions begin saving for retirement, but many workers never increase contributions beyond the legal minimum.

Financial experts warn that even modest increases can make a substantial difference over time thanks to compound growth.

Mr Robinson said: “One of the biggest mistakes people make is treating their pension like a fixed bill that never needs revisiting. Even increasing contributions slightly after a pay rise can have a huge long-term impact thanks to compound growth.”

For younger workers in particular, small increases made early in a career can translate into significantly larger pension pots later in life.

4. Missing out on free money from employers

One of the most costly mistakes can be failing to take full advantage of workplace pension matching schemes.

Some employers are willing to increase their contributions if employees contribute more themselves, effectively boosting retirement savings at no extra cost to the company.

Mr Robinson said: “In some workplaces, people are effectively turning down free money by not maximising employer pension contributions. It’s always worth checking whether your employer will match higher payments.”

5. Never reviewing how your pension is invested

Millions of workers are automatically enrolled into default pension funds and then rarely look at how their money is invested.

While default funds are designed to suit a broad range of savers, they may not remain the best option throughout a person’s working life.

Mr Robinson said: “A lot of people are placed into default pension funds and simply leave them untouched for years without checking whether they still suit their goals or stage of life.”

He added: “Reviewing how your pension is invested, especially as you get closer to retirement, can be an important step in making sure your savings are working as hard as possible.”

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Small changes can make a big difference

The earlier people take an interest in their pension savings, the greater the flexibility they are likely to have later in life.

“Small changes made today can have a surprisingly big impact by retirement,” he said.

“People don’t need to become pension experts overnight, but regularly checking in on your retirement savings can prevent years of costly mistakes.”

He added: “If you’re not sure where to start, always speak to an independent financial adviser.”

Are you reviewing pension savings, contributions and investment choices? Share your advice in the comments below…