Pension savers warned they may be in ‘deep water’ if they pause contributions | Personal Finance | Finance

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Pension savers have been urged to maintain their pension contributions even amid the current financial pressures or they may regret it in future.

Lily Megson, policy director at My Pension Expert, urged people to be consistent in setting money aside for their retirement.

She said: “The key is to maintain consistent contributions – otherwise, Britons may find themselves in deep water later down the line.”

She warned those considering reining in their contributions that this could have a significant impact on their future.

The expert said: “Pausing contributions now could translate to having less income during an individual’s retirement years – a consequence that warrants careful consideration.

“Savers should therefore refrain from pausing contributions. Instead, they might review their existing budgets and see if cuts can be made elsewhere.

“If this is unrealistic, savers should consider reducing contributions slightly to provide themselves with some financial breathing space.”

Calculations from interactive investor found a person now needs an extra £68,700 saved up if they want a comfortable retirement compared to last year, with an extra £4,200 a year in income needed.

Ms Megson also encouraged people to closely monitor their pensions to keep track of how their investments are growing.

She said: “For those with defined benefit pensions, ensure you receive annual benefit statements.

“Similarly, maintain an eye on defined contribution pension schemes by reviewing annual statements, which provide insights into your pension pot’s value and projected retirement income.”

She also encouraged people to see if they have any lost pension pots to boost their retirement savings.

A person can easily lose track of some of their pensions as they change jobs and a lost pension pot could be worth thousands of pounds.

The expert also encouraged people to get regular reviews so they can adjust their retirement strategy as their situation changes.

She explained: “This might involve modifying your risk tolerance or aligning investments with your preferences.

“By conducting gradual changes, you can bolster your financial position against unexpected economic shifts.

“While all this might come across as a complicated undertaking, it doesn’t have to be. In fact, there are independent financial advisers available to help.”

Ms Megson said the state pension is also an “incredibly important” part of many people’s retirement income, particularly with the cost of living crisis.

She added: “However, people do need to consider carefully just how much income they need to enjoy their retirement.

“The state pension is just one piece of the puzzle. Pension planners should start by figuring out how much money they’ll need overall to enjoy the retirement they had in mind.”

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