I started working at a small advertising agency in 1993. They didn’t offer me a pension and I didn’t think to ask. It wasn’t until I moved to a larger agency three years later, that I joined my first workplace pension scheme. Over the years I picked up a few more - saving slowly and steadily until I started freelancing in 2009. When I stopped paying into a pension… for 12 whole years.
If you’re of a certain age, have been self-employed at some point or have taken a career break - for whatever the reason - this start/stop approach to paying into a pension might strike a chord. And you wouldn’t be alone.
This disengagement with our pensions was the very reason that the government introduced automatic enrolment back in 2012.
Despite the fact that contributing to a pension is an incredibly tax-efficient way to save for your retirement, you can see below that the ‘all employees’ pension participation rate sat at a woeful 50%1.
Today, thanks to auto-enrolment, the participation figure is much higher (although around 20% still choose to opt out). Even though this is progress, it’s worth thinking about whether 8% auto-enrolment will afford you the retirement you want for yourself. Particularly as half of workplace pension savers have never considered raising contributions2.
As for the self-employed, they’re still neglecting their pensions, with 41% choosing not to pay into a self-invested personal pension3.
Time to take charge of my pension
I knew that I couldn’t bury my head in the sand about my pension any longer. I needed to understand the potential damage I’d done to it by not paying into it for all those years. So, I did some rough sums.
The government’s automatic enrolment policy is based on a minimum of 8% of a worker’s qualifying earnings being added to a pension scheme (3% from the employer, 4% from the employee, and 1% from tax relief). On that basis, I estimated that I’d lost out on £400 per month in auto-enrolment contributions over the 12 years. This equated to a whopping £57,600. A figure that doesn’t even take into account any profit or compound interest I’d have hopefully made over the years. Learn more about compounding in this short video.
It terrified me. But it also hardened my resolve. It was time to act.
Learn more about auto-enrolment
PlanViewer - my new best friend.
My next step was to download PlanViewer - Fidelity’s workplace pension app. It’s easy to set up and use.
Find out more about PlanViewer and how to set it up
What I like about it, is that it’s more than just a dashboard (although being able to see how much is in it is obviously really useful too).
One of the most important things you need to do, if you haven’t already, is nominate or check your beneficiaries. Aside from your house, your pension is likely to be one of your largest assets - so make sure you’re in control of who gets it if you were to die (simply log in to PlanViewer to add or update your beneficiaries).
In addition, it offers a broad range of tools, calculators, articles, guides, webinars and tutorials, that can help you make the most of your pension.
Here are three features that really helped me.
The retirement calculator is a key feature of PlanViewer. You enter your personal details, like your current pension pot, expected retirement age, and estimated monthly contributions. The calculator then projects your retirement savings and shows any potential shortfall.
After inputting my personal data, I wasn’t surprised to learn that my pension pot wasn’t on track - not for the minimum standard of living I want for myself. As it stands, the State Pension will give me £11,500 per year. My pension pot will currently provide me with an annual income of £15,900 but, for the moderate lifestyle I seek, I’ll need £31,300 per year (the Pensions and Lifetime Savings Association has crunched the numbers on this and the findings are well worth a read). So, if I keep paying in to my pension as I currently do, I’ll be £3,900 per year short of reaching that target.
Even though I had a shortfall, I was encouraged by the clear and intuitive forecasting the tool provided. It made me realise that it’s never too late to start saving for retirement or increase my contributions. And that these changes could make a big difference.
2. The power of small amounts tool
This principle shows how small changes can have a big impact on your retirement savings. By increasing your pension contributions by just 1%, you can make a significant difference to your final pension pot.
PlanViewer lets you try out different contribution rates. It shows you in real-time how even small adjustments can greatly improve your retirement savings. So, for example, If you’re 30 and you earn £40,000, increasing your savings by 1% could add an additional £73,600 to enjoy life at 68.
Warning: The value of pension savings can go down as well as up so you may/(members) get back less than you save.
3. Bringing your pensions together
This section under the ‘Learn’ tab in the PlanViewer app caught my interest because it’s something I’d been thinking about for a while. As part of my ‘not burying my head in the sand exercise’ I’d gone back through my files to track down my pensions. The idea of them being scattered all over the place was making me feel really out of control.
There’s a lot you need to think about before bringing any pensions together - something that the ‘ moving your pension’ page does a good job of explaining.
Warning: It’s important to understand that pension transfers are a complex area and may not be suitable for everyone. Before going ahead with a pension transfer, we strongly recommend that you undertake a full comparison of the benefits, charges and features offered.
What I did next
First, I moved my pensions into one pot. For me, it was a no brainer. It took a little bit of effort but having them altogether makes things so much easier to manage. It’s also great to have a single view of my retirement savings. I should point out that while this worked for me, it might not be for you. Before consolidating any pension, you may want to consider taking independent advice to ensure this decision is right for you and your personal circumstances.
I then upped my contributions by 2%. This should put me on target for the moderate lifestyle I’d be happy with. Anything else will be a bonus.
Finally, I breathed a huge sigh of relief. I hadn’t realised just how much headspace the ‘not knowing’ was taking up. Being in control of my future finances and knowing that - at the very least - I’ll be able to afford a life I’d be happy with has given me a real peace of mind. And that’s priceless.
Some final hints and tips
If you want to make sure you’re making the most of your pension, we’ve put together a checklist to help you keep on top of it. Look after your pension and it will look after you.
1 Gov.co.uk - Workplace pension participation and savings trends of eligible employees: 2009 to 2023
2 Pensions Age - 1 January 2025
3 Pensions Age - 1 May 2024