A number of factors can hit your pension pot by up to £1 million over your lifetime
New findings from the Institute and Faculty of Actuaries (IFoA) have shed light on life choices that could slash a person’s retirement fund by up to £1 million. In its new report, the IFoA explored the challenges many face when saving for their golden years.
Research assessed how six crucial life events can impact pension contributions, leading to significant pension gaps. Interestingly, the most vulnerable are those who delay pension contributions.
For some, this may include starting at age 35 rather than 25, with savings possibly cut from £800k to £500k. According to the Express, Alexandra Miles, of the IFoA Pensions Gap working party, said: “It is concerning that an individual could stand to lose a staggering amount of money during some of the most significant moments of their lives.
“On top of this, they may be largely unaware of these hidden costs and the drastic impact that short-term decisions can have on their pension savings over the long-term. Some may be faced with multiple significant moments throughout their lifetime, further compounding the issue.”
Beyond contribution delays, the IFoA’s other five pension-swaying factors are listed below:
In light of this, the IFoA is pushing for more active roles for both governments and employers in facilitating savings progression. Its researchers have also stressed the importance of personal action to mitigate potential pension losses.
IFoA President Kartina Tahir Thomson added: “The numbers presented in this report are stark. When we are making some of the biggest decisions in our lives, it is worrying that so much is at stake.
“On top of this, many people are unaware of the hidden costs of their decisions that may not impact them until years later, during what could be considered the most vulnerable years of their life.”
