Two pension mistakes that'll cost you in retirement have been made by 'thousands'

Two pension mistakes that'll cost you in retirement have been made by 'thousands'

by · Birmingham Live

Huge pension mistakes that could cost you thousands in retirement have been revealed. New research by financial firm Annuity Ready has revealed two moves those with nest eggs made before Rachel Reeves’ Budget that could cost them in later life.

Savers acted due to media speculation about what pension changes might be implemented in the Budget from the new Labour Party government. Three in 10 withdrew money from their retirement pot earlier than planned, while a further two in 10 reduced their pension contributions.

Sarah Lloyd, director at Annuity Ready, told The Sun newspaper today: “Our findings paint a worrying picture of how people can feel prompted to make significant decisions about their retirement savings in the face of uncertainty.

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"What's concerning is that these aren't just small changes - we're seeing people withdraw money early or reduce their pension contributions based on speculation rather than facts, which has real-world consequences." While you can decide to stop working at any age, you won’t be allowed to access your workplace pension until after your 55th birthday.

In 2015 new rules to taking an early pension came into effect and pension savers now have greater control of their money than ever before. It’s possible to withdraw the money in your workplace pension (also known as a personal pension), in lots of different ways.

You could take a lump sum or cash in your entire pension pot or purchase an annuity or use income drawdown to keep some of your pension invested. "This creates a perfect storm where rushed decisions are made from a place of anxiety rather than informed choice," she explained.

Pension Bee explained: "Before you leave your career behind, it’s important that you calculate how much money you’ve got saved. You can use a pension calculator to work out the income your pension will pay you for each year of your retirement."