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.