UK adults face a significant shortfall in the amount of pension savings they have at retirement compared to what they wanted to retire on, potentially impacting their retirement lifestyle – unless they take action now.
There are several ways to boost your pensions, and many of them work even as you get close to retirement age. Even people with a six figure pension can benefit.
On average, retirees had hoped to build up a pension pot of £250,000, according to research from Standard Life. However, the average amount they accumulated by retirement was £131,000 – leaving a £119,000 shortfall.
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Based on current annuity rates, a pot of £250,000 could lead to an income of £1,056 monthly, or £12,680 a year, assuming a retirement age of 66.
By comparison, a pot of £131,000 could result in a monthly income of £558 in retirement, or £6,700 yearly – £498 a month, or £5,980 a year less.
However, the not insignificant £250,000 pot still falls short of a ‘moderate’ standard of living in retirement according to the Pension and Lifetime Savings Association, even including the state pension.
Retirees facing a shortfall in their money in retirement have several regrets in relation to their financial preparation for later life.
Half (50%) wished they’d thought about their retirement finances at a younger age when they had more time to make changes, 54% wished they saved more, and 53% wished they started saving earlier.
Making a few simple changes today could boost your pension, avoiding both shortfalls and financial regrets.
How can I boost my pension pot?
There are five main ways to increase your pension savings:
1. Consolidate your pensions into one
On average, people will have 11 jobs throughout their career, which might mean you could have 11 pension pots by the time you reach your retirement. This is usually not an ideal situation.
Multiple pension pots are easy to lose or forget about. Additionally, each pot will be charging separate fees that eat into your savings. Consolidating a series of smaller pots into one big one can reap significant rewards.
Not only will you be paying less in fees, but you’ll also be benefiting from the power of compounding – where one bigger pot can more easily grow faster than lots of little ones.
Richard Sweetman, senior consultant at pensions consultancy Broadstone, says: “Consolidating into a single scheme before retirement can make your retirement savings easier to track and manage, giving a clearer idea of what your income in retirement is likely to be.
“Consolidating close to, or at the point of, retirement may also be beneficial, allowing access to more cost-effective options to take pension income.”
However, he cautions “it's important to check for any exit charges or lost benefits before transferring”. Also give careful consideration to which investment fund and pension provider to use as the consolidation vehicle.
How to track down old pensions to consolidate them
Samantha Gould, of campaigns at now:pensions, encourages people to “go through your old paperwork to find the names of your old pension providers and get in touch with them to find out about your savings”.
You can find lost pensions by contacting your old company directly, or using the government’s free Pension Tracing Service.
“Then you can log in and check your accounts and think about how much money your future self might need once you’re retired,” says Gould.
2. Increase your pension contributions
One of the simplest and most effective ways to boost your pension is to increase your regular contributions — even by just a small proportion of your salary.
Over time, this small adjustment can significantly enhance your retirement savings due to compounding, particularly when combined with tax relief and employer contributions.
The earlier you start increasing your contributions the longer they have to grow and boost your pension. However, even if you start later, it can provide a significant increase to your final pot.
Standard Life recently calculated someone who increased their pension contributions by just 3% to a total of 11% (8% employee, 3% employer) from the age of 45 could build up a pot £32,000 bigger than someone who contributed the minimum level through their career, in today’s prices.
Someone who had no pension savings at all until the age of 45 could build up a similar pot to someone who had contributed at minimum level throughout their career by contributing 18% of their salary from 45 until retirement.
Gould points out some employers do match an employee’s contributions up to a certain level. For example, some employers offer to match their employee’s contributions at 10%.
“This means 20% of your salary can be paid in but will only cost you 10% (with your employer paying in the other 10%). This is a great way to build up your pension savings while also benefiting from tax relief from the government on top,” Gould says.
Directing some or all of a bonus to your pension can also reap big rewards. Sweetman says: “Contributing one-off lump sums, for example from a bonus payment, can help to fill any expected shortfalls in the value of a target pension pot,” he adds.
Only 7% of people make occasional one-off lump sum payments into their pension, according to Standard Life research. However, one-off pension contributions of £1,000 every five years could boost your pension by £23,000 in retirement, the pension firm found.
If you began working on a salary of £25,000 per year and pay the minimum monthly auto-enrolment contributions (5% employee, 3% employer, known as the 8% pension rule) from the age of 22, you could have a total retirement fund of £434,000 by the age of 66.
However, if you were to also top up your pension with nine one-off payments of £500 every five years, from the age of 25 to 65, you could find yourself £11,000 better off in retirement.
Of course, those in a position to contribute more have the potential to amass a larger retirement fund – for example paying in £5,000 every five years, between the ages of 25 to 65, could result in a total pot of £549,000 – £115,000 more than if no additional contributions had been made. (These figures are not adjusted for inflation.)
3. Switch out of your work default fund
Your workplace pension will have put you in its default fund, but that may not be the best performing option for you.
Pension consultancy Barnett Waddingham recently analysed 22 default arrangements governed by defined contribution workplace pension providers in the UK, with performance data as of 31 December 2024. These providers have more than £500 billion of assets, and over 43 million members between them.
It found in the accumulation – or growth – phase of pension scheme member saving, the strongest performer default fund over the year returned 23.3%. The weakest performer returned 8.9%.
This means the gap between the highest and lowest performers was 14.4% – greater than the 9.7% gap in 2023.
Sweetman says: "Many employees remain in their workplace pension scheme’s default fund without realising they have options. While default funds are designed to suit a broad workforce, they may not align with an individual’s risk appetite or retirement goals.”
Gould says when starting a new job, have a good look at the workplace pension you’re offered, including what default fund your savings are invested in.
“You may want to consider moving it to a different fund, whether that be a higher or lower risk fund, depending on your personal circumstances, risk appetite, or because cheaper funds with lower fees may be available,” she points out.
Pension providers often change the investment approach used in the default fund, so keeping up to date with these changes, understanding the rationale for the investment strategy and checking it is right for you is important.
“This is especially so at-retirement, where the approaches between providers can be quite different,” Sweetman adds.
4. Choose a cheaper pension or funds
Not all pension funds are created equal when it comes to fees, even among different workplace pension providers.
Many people will have multiple pension pots, often set up when they were with an old employer. While a charge cap of 0.75% applies to the default investment option in auto enrolment workplace pensions today, many pension policies, including older contracts or those setup outside auto-enrolment, may carry higher fees.
Past studies by the Financial Conduct Authority (FCA) have shown that charges on some older pensions, especially smaller accounts, can average around 2%.
Consolidating into the cheapest pension scheme can be a good idea. Figures from investment platform AJ Bell show that someone combining three pensions with charges of 1.5% to 0.75% could boost their pension pot by over £7,000 over ten years or £20,000 over 20 years if they were to switch to a single, lower cost account.
Some actively managed funds also come with high charges that can eat into your returns over time.
Sweetman says: “By choosing lower-cost funds, such as index trackers or passive investment options, you may achieve similar growth potential at a fraction of the cost — leaving more of your money invested and compounding over time.”
However, this is a complex area – some funds do have higher charges but may also have beneficial characteristics, such as diversifying risk or investing in assets with better potential growth. If in doubt, get professional financial advice.
5. Make sure you’re in line for the maximum state pension
The state pension forms a key part of most people's retirement income. To receive the full new state pension – which in 2025/26 is worth £230.25 per week, or £11,973 a year – you typically need 35 qualifying years of National Insurance contributions.
“If you have gaps in your record, it's often possible to top them up through voluntary contributions,” Sweetman points out. “This can be a cost-effective way to boost your guaranteed retirement income, especially if you're self-employed or have had periods out of work."
The cost in 2025/26 to fill in a missing week is £17.75 per week, or £923 per year.
Each extra complete year of National Insurance you buy will give you up to £6.58 more a week (£342.00 a year) in state pension, before any annual increase.
If you’re below state pension age, check your state pension forecast to find out if you’ll benefit from paying voluntary contributions. You can also contact the Future Pension Centre.
If you’ve reached state pension age, contact the Pension Service to find out if you’ll benefit from voluntary contributions.
If you’re living or working abroad and you’re over state pension age, or will reach it within six months, then contact the International Pension Centre for advice.
How much should you save in your pension pot?
How much money do you need to retire is a question on everyone’s lips. It depends on individual circumstances, but the Pensions and Lifetime Savings Association (PLSA) has analysed what life in retirement might cost at three different levels; minimum, moderate and comfortable.
These figures are for total expenditure, not income. For many people, the state pension, currently £11,973 a year for those eligible for the full new amount, will be a big contribution to cover their costs. The rest, however, would need to come from private pensions.
Minimum – single £14,400, couple £22,400 (per year)
This will get you all the basics to cover your daily needs, with some money left over for treats. For a single person, this covers spending £50 a week on groceries, £25 a month on food out of the home, and £15 per fortnight on takeaways.
The minimum income level doesn’t allow for a car, but does give £10 per week on taxis for a single person, and £100 per year on rail fares. It also includes a week long UK holiday, basic TV and broadband, plus a streaming service.
Moderate – single £31,300, couple £43,100 (per year)
At this level, a single person gets £55 a week for groceries, £30 per week for food out of the home, and £10 every week on takeaways, plus £100 a month to take others out for a monthly meal.
The moderate income allows a single person to maintain a three year old small car, replaced every seven years, as well as £20 a month on taxis and £100 per year on rail fares. For travel there is a fortnight 3* all inclusive holiday in the Mediterranean and a long weekend break in the UK to look forward to.
Comfortable – single £43,100, couple £59,000 (per year)
In a comfortable retirement, retirees can look forward to quite a bit of luxury. A single person can replace their kitchen and bathroom every 10 to 15 years, keep a small car that they replace every five years, enjoy a fortnight 4* holiday in the Mediterranean with spending money and three long weekend breaks in the UK, plus an extensive bundled broadband and TV subscription.
Shopping budgets also go up a bit too. Pensioners on this budget could spend around £70 a week on food for a single person, £40 a week on food out of the home, £20 a week on takeaways, and £100 a month to take others out for a monthly meal.
What is the maximum pension pot allowed?
“There is no technical limit on how much you can contribute to your pension, but tax relief is only available on contributions up to the annual allowance of £60,000 a year (in the 2025/26 tax year),” says Gould.
There used to be a limit on how much you could save into a pension during your life, known as the lifetime allowance. This was completely abolished from 6 April 2024, removing the overall limit for individuals on pension savings that qualify for tax relief.
From 6 April 2024, there has, however, been a limit on the total amount of lump sums and lump sum death benefits that you can receive free from income tax. These are the lump sum allowance and the lump sum and death benefit allowance.
Usually, your lump sum allowance – the amount you can take tax tax-free – is £268,275, but this may be higher if you hold a protected allowance.
Your tax-free lump sum and death benefit allowance – which includes certain lump sums paid on death before age 75 and serious ill-health lump sums paid before age 75 – is £1,073,100, but this may be higher if you hold a protected allowance.
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