State pensioners warned over six 'risk factors' which will see pension cut

State pensioners warned over six 'risk factors' which will see pension cut
-Credit:Reach Publishing Services Limited


State pensioners have been warned over six "risk factors" which could hit their retirement savings. Department for Work and Pensions (DWP) state pensioners face a cut to pension if they make a series of mistakes, personal finance experts have warned as the Cost of Living crisis continues.

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."

The IFoA identified five other key factors that influence pensions, including switching from full-time to part-time work, potentially losing up to £200,000, not starting a pension at 25 and waiting until age 35, could lose a saver £300,000 over a lifetime and not taking advantage of extra employer contributions, worth at least £100,000 over an average working lifetime.

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Others included opting out of a pension for five years, potentially costing £100,000 by retirement, freezing pension contributions during six months of maternity leave, potentially costing £30,000 and getting divorced, potentially costing an ex-partner £77,000.

IFoA President Kartina Tahir Thomson said: "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."

Workers are advised to speak to their HR department or pension provider to see what extra contributions are available.