The TEN big pension blunders to avoid revealed, plus our unmissable tips on how to fix them

Saving for retirement takes an entire working life so it would be unusual to make no mistakes whatsoever, especially while you are young and still getting the hang of your finances.

1. Putting your head in the sand

Many people are diligently saving into pensions but have no clue what income that is likely to get them in old age.

Don't stay in the dark, because for all you know you're on track for a comfortable annual pension and have nothing to worry about. But if you're not, it's better to find out sooner when you still have time to act.

It's not that hard to review your pensions and shouldn't take you long either. Make a list of all the places you have worked, find the details of their pension schemes online, and ring up or use their contact tools.

If any have moved or merged with another provider or administrator, they should tell you where to go instead, or see below on finding lost pensions.

Once you find your schemes, make sure they have up to date contact details for you and ask for the following information:

• The current fund value

• The pension projection at retirement age

• The current transfer value, and any penalties to move or perks if you stay.

You should end up with a rough income figure from each scheme. Add these to what you might get in state pension, currently worth £12,550 a year if you qualify for the full amount.

Take your total projected income figure and compare it to your current salary, keeping in mind your living costs are likely to be lower in retirement.

You can also use This is Money's pension calculator, or one of the many others available online, to find out whether you will have enough for the lifestyle you would like in old age.

The standard industry measures of what you need for a basic, moderate or comfortable retirement are below. These annual income figures don't take into account income tax, housing costs or care fees.

2. Mislaying old pensions

This is easily done especially if you have changed jobs a lot. But you are likely to have saved up a bit into a pension each time, and if it was a final salary scheme it could be more valuable than you think.

Luckily this is also an easy blunder to fix. Every time you move home, contact all your pension schemes and give them your new details. It doesn't need to be done immediately, but always put it on your to do list.

If you have fallen behind on this job, just make a list of all your old employers, get details of their pension schemes, and make contact again.

Should you run into trouble finding any of your old schemes, use the Government's free pension tracing service.

If you are still getting nowhere, our pensions columnist Steve Webb has written a free guide which looks in more depth at finding lost pensions. One tip is to contact old colleagues who might have more info or are already drawing a pension from the scheme.

3. Missing out on a full state pension

It is very important not to fail on this one, but it's pretty easy to keep tabs.

The full flat rate state pension is currently worth £12,550 a year and will typically make a significant contribution to your eventual retirement income.

It also provides a guaranteed income until you die, so you can rely on it - like a traditional final salary pensions or an annuity, but unlike a defined contribution pension fund which is invested and will fluctuate in value and might even run out.

You need to have 35 years of contributions to get the full amount.

The ways to earn it are paying National Insurance contributions while you work, qualifying for free credits - typically for family caring duties, disability or periods of unemployment - and buying state pension top-ups.

Also look at your state pension forecast to see if you're already on course for the full amount or need to take action.

If any qualifying years are missing, check to see if you might be able to get a free NI credit.

The rate for 2025/26 is £17.45 a week or £923 for a full year if you were employed.

4. Failing to grapple with getting old

This is a personal and very human tendency.

Many people simply don't like to dwell on it, or are inclined to live in the present, or shy away from thoughts of when they might get ill and need care.

You might also associate thinking about old age with how you might eventually die.

If you shun thoughts of your later years, resist this impulse at least long enough to consider some of the positive aspects of retirement.

Your time will be your own. You can get up when you like every day of the week. If your work was a grind or you didn't like your colleagues, you can put them out of your mind forever.

And in the best case scenario, you will have enough saved to enjoy life, doing the things you like best in your free time without worrying about money.

It is important to imagine your ideal retirement, because then you have more chance to make it an affordable reality.

Perhaps you like or even love your work and are putting off thoughts of retirement. But that means the longer you save, the richer you are likely to be, and the more extravagantly you might be able to treat yourself to compensate for the loss of your job in the end.

If you like travel, then you will need to save harder into pensions than if you are a homebody, and be prepared to spend more in the early years of retirement when you are most likely to be in good health.

Should you want to move home, make over your present one, or have other big ticket purchases in mind, then it's sensible to work out in advance how much tax-free cash you will have on draw on.

Decide if you want to take large upfront sums from all your pensions at once, or stagger the withdrawals to fund your projects.

You can access your pensions from age 55 at present, but this will rise to 57 from April 2028, so factor that into your plans.

Perhaps you are most focused on family life, and on making lifetime gifts to younger members or maximising the inheritance you can leave.

It is worth having a good think about retirement - the best possible version, with lots of free time, sufficient funds, and good health - as knowing what you are aiming for will help you plan ahead.

5. Non-joined up thinking

When we think about our finances, we often put them in separate buckets - Isa savings and investments, our home, pensions we have acquired over the years, the bank account set up to pay essential bills, an annual holiday fund, and so on.

This might be fine when you are working, and saving and spending your way through everyday life.

But in the run-up to retirement, you should assess your assets and debts as a whole, to avoid blunders or missing trade-offs that will save you money in the longer run.

For example, if you are over 55 and haven't paid off your mortgage, is it worth taking tax-free cash from your pension to get shot of it, even if you are still working and plan to leave the rest of your fund untouched.

If you can afford to over-pay on your mortgage, or put money into your pension, which should you pick - or should you split the difference and do both.

If it is too complicated to work out on your own, consider seeing a financial adviser.

6. Leaving free money on the table

Obviously do not opt out of your work pension, unless you are truly struggling to pay essential bills for food, heating and housing.

You will be signed up automatically if you are over 22 and earn over £10,000 a year, but if you don't qualify you might be able to join anyway so check the rules of your scheme.

The younger you start saving the better due to the wonders of compounding, which requires as much time as possible to create amazing levels of wealth - the later you wait, the more you miss out.

You get free handouts for saving into a pension - the money you put into your pot is topped up by your employer and the Government.

Under auto-enrolment, you have to put in at least 4 per cent of your salary between £6,240 and £50,270 into your pension, but the free cash pushes that up to 8 per cent. If you opt out all the above is lost.

There are often other lucrative top-ups worth exploring, particularly from employers who are more generous as a way to recruit and retain staff.

For example, an employer might automatically match 3 per cent of your earnings as its minimum contribution to your pension already.

But it might be willing to make 4 per cent, 5 per cent or 6 per cent in matching contributions if you opt to save a higher proportion of your income.

If you can afford to do this, you will also receive more pension tax relief from the Government than you would have done on the extra money saved towards retirement.

It can be advantageous to divert savings to your pension to get this extra employer money, rather than sticking it in a cash Isa or other account - although it does mean you will be locking it up until retirement rather than having readier access to your funds.

Meanwhile, salary sacrifice arrangements benefit both workers and the employers which offer them.

Employers allow staff to take a supposed 'pay cut', but the money gets ploughed into their pension or put towards some other benefit like childcare or an electric vehicle instead, and both sides pay less NI as a result.

Paying more into your pension can also push you into a lower income tax bracket - whether you do it via salary sacrifice or not - and can help you put off repaying student loans, or allow you to carry on receiving child benefit,

Contributions made via these schemes without incurring NI contributions will be capped at £2,000 a year from April 2029.

If you work for yourself, you don't get free money from an employer, but you do benefit from tax-relief from the Government.

7. Not keeping on top of pension investments

If you're in a modern work pension in the private sector, it will be invested in financial markets and you bear all the risk of building up your fund and turning it into an income at retirement.

Your employer's default pension fund is chosen to fit the average staff member, and the vast majority - around 90-95 per cent - stick with it.

Such funds tend to play investments safe because employers don't want to get blamed for costly mistakes.

Some pension experts recommend sticking with your default fund, especially if you are not knowledgeable about investing - and some providers emphasise that they put a lot of effort into making them as successful as possible.

But this might not be the best strategy. Typically people take more risk with pension investments when they are younger, which means tilting them entirely or mostly towards stock market investments rather than government or corporate bonds and cash.

Investing in the stock market has a track record of delivering the best long-term returns.

Two key things to look at when evaluating funds are where they are invested and how much they cost.

Beyond the default fund, you are likely to have a choice of other funds, although some schemes limit this more than others.

A global stock market tracker fund is the cornerstone of many professionally recommended investment portfolios, but there will be others targeted at specific areas, countries or themes, for example, emerging markets, the UK, or smaller companies.

On fees, the charge cap on a default fund is 0.75 per cent, and those on the selection of other funds available may well be higher.

However, they will still generally be cheaper than if you buy the same fund yourself outside a pension, because workplace providers are able to negotiate bulk discounts.

People considering whether to open a Sipp, because they have a wide and flexible range of funds, trusts and shares unlike work funds, should compare the charges.

Also, remember the potential loss of free employer top-ups if you haven't already maxed out matched contributions to your work scheme.

When comparing fund fees, the key figure to check is the 'ongoing charge', which is the investing industry's standard measure of fund running costs.

One common investment error is not keeping a close eye on how a default fund is being derisked in the run-up to retirement.

'Lifestyling' is industry jargon for shifting funds some or all the way from stocks into bonds and cash before retirement. But if you plan to stay invested in old age you might want to stick with stocks.

Some schemes carry out lifestyling more or less automatically, so keep an eye out for any messages or letters from your scheme from about 10 years out from retirement age, in case you want to opt out.

8. Mistrusting your work pension

You might love or hate or not care less about your work, your bosses or your employer. Just don't let your feelings about your job affect your attitude towards your workplace pension.

It doesn't matter how low your and your colleagues' morale might be in your workplace, or how suspicious you are about whether management has its staff's best interests at heart.

Your employer is legally required to provide a pension scheme and pay at least the minimum contributions into it for you.

It may be generous or just stick to the auto enrolment basics. But the scheme itself will be run at arms' length by trustees or another external firm, such as a big insurer.

So be clear-eyed and take full advantage of the benefits. Modern work pensions are essentially cheap, simple, subsidised investment products, set up ready made for you and with a lot of perks you might not expect.

9. Making tax blunders

There are many tax traps when it comes to pensions, so don't blame yourself too hard for not knowing them all in exhaustive detail.

The rules can be so obscure and technical that the average saver cannot be expected to understand them.

If you have a large pension or your affairs are complicated it's therefore best to get financial advice.

If your finances are relatively conventional then read our frequently updated guide to defending your pension from the taxman before deciding whether you need to pay for professional help.

Here's a couple of examples. The annual allowance is £60,000 and is the standard amount you can put in your pension every year and qualify for tax relief on what you saved.

It includes your own and your employer's contributions into a pension, and the tax relief itself. You can still benefit from any of it left unused over the three previous tax years, though only under certain conditions

The rules are more complicated for higher earners, whose annual allowance is tapered down to £10,000.

Meanwhile, there is an 'emergency tax' trap where people making one-off pension withdrawals have to claw back overpaid tax from HMRC.

And there is something called the 'money purchase annual allowance'.

This means when you start tapping a defined contribution pension pot for any amount over and above your 25 per cent tax free lump sum, you are only able to put away £10,000 a year and still automatically qualify for valuable tax relief from then onward.

10. Tapping your pension too early

You do not have to access your pensions at the earliest opportunity, which is 55 now and rises to 57 from April 2028.

If you have a specific purpose in mind, or want to pay off debt like a mortgage, that is one thing.

But if you have no good reason for making a withdrawal, you can miss out on future investment growth. And simply transferring the money to a bank or savings account means it can be eaten away by low interest rates and inflation.

Despite speculation about a raid on pension savers, tax-free lump sums were left untouched by Chancellor Rachel Reeves in the last two Budgets.

But many people made earlier than necessary withdrawals as a precautionary measure, defying financial experts' warnings that this could damage their pension funds.

Although tax-free lump sums are popular, you can come out ahead if you take a patient approach.

Savers with investments in defined contribution pensions are not limited to just one chance to take a tax-free lump sum worth 25 per cent of their pots - instead they can benefit from untaxed chunks over multiple withdrawals.

Each chunk you take will be 25 per cent tax-free and 75 per cent taxed at your marginal rate. The marginal rate is whatever tax band you are pushed into once all income, including withdrawals from your pension, has been counted.

Every time you take a chunk, you'll receive 25 per cent of your pot tax-free.

If your pot continues to grow, that 25 per cent can also increase in value over time.

This strategy allows your pot to keep growing and you can end up with much more tax-free cash to take in the longer run than you would have at 55.

However, you lose this tax-free perk if you tie up your entire pot in an annuity or income drawdown scheme. You therefore need to check that the bulk of your pension cash is 'uncrystallised', with either your current pension provider or anywhere else that you transfer it.