Retirement expert Susan Hope, business development director at Scottish Widows, has highlighted five common pension mistakes ahead of Pension Awareness Day on September 15. These errors can cost savers thousands of pounds in lost contributions and growth.
Missing out on employer matches
Hope says many people, especially young people, are unaware of their employer contribution. She cites an example: her nephew nearly declined his workplace pension because £83 per month felt too expensive, but he did not know he was on a double match scheme.
A double pension match scheme means the employer contributes twice the percentage the employee pays, up to an agreed maximum. For instance, if you pay 5% of your salary, your employer adds 10%. Hope stresses the importance of understanding your workplace pension structure and discussing it with your partner, whether married or unmarried.
Losing track of pension pots
A study by the Pensions Policy Institute estimated there are 3.3 million lost pension pots in the UK, containing £31.1 billion in assets. These lost pensions are worth an average of £9,470, rising to £13,620 among those aged 55-75.
Hope suggests going back through your CV to ensure every period of employment has a pension pot. If you do not know the provider, you can email the employer or use the government's pension tracing service. Many banks and providers, including Scottish Widows, offer tracing via their apps.
Keeping life admin up to date
Not updating beneficiary forms can mean your pension goes to an ex-spouse or the wrong person, causing delays and bypassing your wishes. Hope advises checking that your nomination of beneficiaries is current, especially with many blended families in the UK. She notes it takes about 38 seconds to nominate a beneficiary through the Scottish Widows app.
She also recommends ensuring your name and address are up to date on all pension pots to receive yearly statements and access funds easily at retirement.
Avoiding opting out or delaying
Delaying contributions reduces time for money to grow. Research from the Scottish Widows Women and Retirement Report 2024 estimated that removing the £6,240 lower earnings limit and reducing the age requirement from 22 to 18 could increase an average 18-year-old woman's future pot by £47,000. The 2025 report highlighted that a one percentage-point increase in contributions sustained across a career can offset a five-year career break.
Hope recommends having small, bite-size conversations about pensions with children at the right time, so they have a good financial grounding when entering the working world.
Withdrawing money tax-inefficiently
Hope warns against prematurely withdrawing from a pension without understanding the tax implications. She advises taking a holistic look at all finances, including property and other assets, before making decisions. If you do not feel equipped, seek advice from an advisor or through MoneyHelper, formerly the Money Advice Service.
