If you intend to retire later than originally planned, tell your pension provider

As life expectancies rise and people extend their careers, many will retire later than they originally anticipated. In theory, that should give you extra years to generate valuable income. But failing to share your plans with your pension provider could see you missing out.

Many savers have opted for the default investment strategies offered by providers rather than deciding on asset allocations or funds themselves. The default plans shift savers' money into less risky assets as retirement approaches: providers don't want you to be caught out by market volatility when it's too late to recover. But timing is crucial. If, say, you told your pension provider you expected to retire at age 65, but you now plan to work until 68, it will begin moving you into low-risk assets three years too early. That could mean missing out on three years of returns from higher-risk but higher-return assets.

Insurance company Aviva reckons that someone who told their provider they would retire at 65 but who actually works until 68 could forfeit £4,000 of extra pension as a result. The cost for someone with a set retirement age of 60 could be £10,000. If your retirement plans have changed since you set up any of your pensions, notify the providers. They should then update your investment strategy accordingly.

MoneyWeek

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David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.