Pension savers could be missing out on “hidden gems” to boost their payments when they eventually draw down from their pots.
Lily Megson, policy director at My Pension Expert, urged people to read up on the rules for their pensions and take advantage of certain little-known features.
She told Express.co.uk: “People often underestimate the hidden benefits within pension schemes.
“For instance, some schemes offer a guaranteed annuity rate, a potentially valuable advantage that individuals may not be aware of until later down the line. It’s crucial to scrutinise the details of your pension plan to uncover these hidden gems.”
On the other hand, she said one little-known rule that often catches people off guard are the exit fees imposed by some schemes.
She explained: “Many funds impose exit fees when individuals decide to switch, which means you should always be careful by reading the fine print.
“Being aware of such charges ensures a more informed approach to managing your pension.”
Explore the market
Ms Megson urged savers to make sure they explore the market and understand their options. She said: “There’s a vast array of options available ranging from passive funds to discretionary funds, each offering different risk levels to suit individual needs.
“People should feel empowered to search the market and ask questions to find an option that aligns with their financial goals.”
She said people can get help with this by consulting a financial advisor and that this is feasible and affordable for many people.
How often should I check my pensions?
The expert said a person should check their pensions at least once a year, so they can measure their performance and make sure this is aligned with their retirement goals.
She said: “Providers usually send regular updates on portfolio performance, serving as a useful prompt for individuals to check in on their investments.
“It’s essential to stay informed and comfortable with how the portfolio is progressing over time.”
People should also review their retirement strategy when they have a change in their situation, such as their expenditure changing or moving house.
Ms Megson said: “Seeking advice from a financial adviser during such times is wise, as they can outline the implications of these changes and recommend adjustments to keep retirement plans on track.
“When it comes to investments, individuals should assess their comfort level with risk. Understanding how much one is willing and able to lose without impacting immediate circumstances is crucial.
“While all investments carry some level of risk, it’s important to align the risk level of the portfolio with one’s risk tolerance.
“Speaking to an adviser before making decisions helps in comprehending the risk level incorporated into retirement plans.”
Pension savers are also encouraged to read up on the charges and management fees involved with their portfolios, so they can make informed choices about their investments.
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