People are reluctant to think about their pensions – let alone act early. Yet the gaps that open up in a pension compound over time and rarely close, as different research reports this week have shown.
A shortfall from a career break in your thirties can still be felt decades later; a lack of planning in the years before retirement shows up as a squeeze once the pension is being drawn down, plus what's left over is about to be taxed differently from April 2027, leaving pension savers in an action paralysis.
Research from RBC Wealth Management, surveying 5,672 UK adults aged 45-75, found one in six people in this stage of life haven't started planning for retirement at all, even though 57% now rank “making my money last” as a top financial priority, ahead of saving for retirement itself (31%).
A quarter of people consult no one at all before making financial decisions.
As Michelle Holgate, wealth manager director at RBC Brewin Dolphin, said: “Retirement planning isn't just about the numbers. It's about giving people the confidence and clarity to focus on what matters most to them”.
Below are some of the most common pension problems that people don’t tackle, with practical advice on how to do just that.
Review pensions regularly
Holgate said an easy solution to many issues is to simply review pension statements regularly, since failing to engage with a pension can mean being defaulted into a standard annuity rather than a drawdown or investment strategy suited to individual circumstances.
She also recommended putting retirement goals down on paper, splitting them into what can be controlled now, what can't be controlled yet and what can't be controlled at all, as a way of turning a vague sense of unease into a concrete next step.
Awkward conversations, including wills and powers of attorney, are worth having early, she added, since sorting them out removes a layer of uncertainty later.
And rather than relying on a workplace pension alone, Holgate suggested building a more diverse retirement pot: cash reserves sit alongside options such as international bonds, Venture Capital Trusts (VCTs) and the Enterprise Investment Scheme, both of which carry meaningful tax reliefs for those willing to take on the higher risk of early-stage or unlisted companies.
Check your progress
Knowing how much you’ll need in retirement is difficult and even those who plan well don't necessarily get a reprieve once they retire, as costs keep rising.
Research from AJ Bell, based on a survey of 1,000 retirees, finds the average respondent now spends 40% of their pension income on essential household bills. Average single pensioner income rose just 6.4% between 2021/22 and 2024/25 – from £312 to £332 a week – against cumulative inflation of 24.9% over the same period: a “horrible squeeze”, according to Sarah Coles, head of personal finance at AJ Bell.
Her advice is to start with a pensions calculator, which highlights “if you're on track for the retirement income you need or whether you need to boost your contributions”.
“If you're putting money into a workplace pension and only making the minimum contributions you have to under the auto-enrolment rules, it's worth checking with your employer if they will match any extra money that you pay in, up to a certain level,” she said.
“Many employers do offer some kind of matching and you could be missing out on extra 'free money' if you overlook it.”
Consolidating old pensions helps too, she added, as it can result in “easier administration as well as lower costs, meaning your pension keeps more of your investment returns over the long term”.
Plan ahead for career breaks
Stopping pension contributions is sometimes inevitable, especially for women. One in 10 women say they paused, stopped or reduced pension contributions during a break from work, missing out on employer contributions altogether.
New research from St. James's Place calculated the damage of a five-year break at age 30, which could turn a projected £238,632 pension pot at 68 into £207,707 – a £30,925 shortfall – and closing that gap after returning to work would mean lifting combined contributions from 8% to around 9.72% of pay.
Claire Trott, head of advice at SJP, said career breaks are “a normal and often necessary part of life [but] for women in particular, these periods are both more common and often longer than those of men, meaning the financial impact can build up over time”.
Trott suggested checking employer policies in advance, including whether enhanced pay or employer pension contributions continue during maternity, parental or sick leave.
Salary sacrifice arrangements can affect Statutory Maternity Pay (SMP), since SMP is based on average weekly earnings, so it's worth checking how pension contributions made this way could change what's received.
Those who don't qualify for SMP may still be eligible for Maternity Allowance, Trott noted, while those caring for an adult family member may be able to claim Carer's Allowance or Carer's Credit.
Trott also recommended reviewing pension contributions once back at work and rebuilding them over time where there's scope to do so.
Sort your pension paperwork before the rules change this April
From April 2027, most pension pots left behind after death will be counted for inheritance tax for the first time. HMRC guidance suggests schemes could be instructed to withhold up to half of a beneficiary's death benefits while a tax position is resolved, so out-of-date paperwork could leave a family waiting on money they're relying on at exactly the point they need it.
Angeline Ong, investing expert at IG, said the shift makes it worth acting now to get pension paperwork and beneficiary nominations in order well before the deadline as “a nomination made years ago may no longer reflect who someone actually wants to benefit”, she noted.
Finally, beyond the paperwork, Ong recommended stress-testing what a pension will actually pay after tax, given the personal allowance (£12,570) and higher-rate threshold (£50,270) are frozen until 2031.