What the research tells us
Despite pensions being one of the largest assets many people will ever hold, confidence around them is often low. Recent research1 revealed that one in five people don’t know what type of pension they have. More than half are unsure where their money is invested. Nearly seven in ten hold multiple pension pots, and some don’t even know how many. Many are unaware that the government adds tax relief to contributions.
Encouragingly, a quarter of people have increased their contributions, showing that when the benefits are clear, people take action. For those approaching retirement, these findings underline why it’s so important to stay engaged with your pensions as you prepare for the years ahead.
Beyond the State Pension
The State Pension is a useful foundation, but it’s far from enough to maintain the lifestyle many people want. Even if you qualify for the full amount, it equates to just under £12,000 a year. That may cover basics, but it’s unlikely to provide the flexibility or security most aspire to in retirement.
To receive the full entitlement, you’ll need 35 years of National Insurance contributions or credits. If you’ve had career breaks or time abroad, checking your forecast at gov.uk/check-state-pension is a simple but important step.
Defining the retirement lifestyle you want
The Pensions and Lifetime Savings Association (PLSA) sets out three Retirement Living Standards to give people a benchmark. These are for a single person:
- Minimum – around £13,400 a year, covering essentials with limited extras
- Moderate – about £31,700, offering more flexibility and security
- Comfortable – roughly £43,900, affording greater choice, such as longer holidays and leisure activities.
These figures exclude housing costs. If you anticipate supporting children into adulthood, helping with property deposits, or continuing to fund a certain lifestyle, your income needs may be much higher.
Making pensions and assets work harder
Your pensions and investments are likely to represent a significant share of your wealth. That makes it vital to review whether they are performing as expected and aligned with your goals.
For some, this may mean adjusting contributions while earnings remain strong. For others, it’s about reviewing drawdown options, consolidating old schemes, or checking whether your investment mix balances income with capital preservation. If you hold additional assets such as property or a business, aligning these with your pension strategy can provide a clearer picture of your future flexibility and retirement income.
Don’t forget tax relief as every contribution you make continues to receive a government top-up, making pensions one of the most tax-efficient ways to save.
Pensions and inheritance planning
Pensions are not only a retirement planning tool, they are also an increasingly important part of estate planning. This is an area of change – planned rules to pensions and Inheritance Tax (IHT) make it essential to keep your plans under review. High-value estates in particular should consider the impact of IHT, annual gifting allowances and the use of trusts.
Your financial planner can help ensure your pension strategy supports both your retirement income needs and your legacy goals, giving you confidence that wealth will be transferred in line with your wishes.
Planning ahead with confidence
Retirement may be just around the corner, but the decisions you make now carry significant weight. Reviewing your pensions, clarifying the income they can provide and aligning them with your wider assets and estate plan offers peace of mind and control.
This isn’t about becoming an expert in tax or pensions, it’s about asking the right questions, making informed choices and knowing when to seek expert advice. With the right guidance from your financial planner, you can feel confident that your money is working for you now and for your loved ones in the future.
Your future, your legacy
Pensions are one of the most powerful tools you have. By taking time during Pension Awareness Week to review, refine and plan, you can step into retirement with confidence – knowing your lifestyle is protected, your loved ones are supported and your legacy is secure.
Your life. Your money. Your future. Let’s give your pension the airtime it deserves.
1Aviva, 2025
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority (FCA) does not regulate Will writing, tax and trust advice and certain forms of estate planning.