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The cost of living crisis has brought turbulent times for our finances with the most recent data from the Hargreaves Lansdown Savings and Resilience Barometer, which provides a snapshot of the nation’s overall financial resilience, showing that only 36% of households are on track for a moderate income in retirement.
Inflation has boosted the amount of money people need in retirement, which means more are now falling short. The average pension gap — the difference between what you have and what you need to have to achieve a moderate retirement income has opened up to £31,546 — four times more than it was in 2019.
Read more: Five top tips if you retire in 2025
There are big regional variations around pensions, according to the research. Wokingham for instance is well on track — on average households have a pension gap of just £265. This is in stark contrast to Kingston upon Hull where the gap to a moderate retirement income stands at £54,094.
How to improve your pension income
Boost your contributions
Taking the opportunity to boost your contributions every time you get a pay rise or a new job can make a huge difference to how much you end up with and you can check to see if your employer is able to increase their contribution if you boost yours.
Track down old pensions
It’s also important to check to see if you have lost track of an old pension from a previous employer. It’s easily done as you move homes or get a new job, with recent data from the Pensions Policy Institute estimating well over three million lost pensions in the system. Finding a lost pot could have a transformative effect on your planning.
If you think you may have lost a pension, then contact the government’s Pension Tracing Service. You will need to give them either the name of your employer or the pension provider and they will give you contact details.
You may then decide to bring them together. This can make it easier to keep track of your pensions, but you need to make sure you don’t incur expensive exit fees or lose valuable benefits such as a guaranteed annuity rate by doing so.
Figure out if you're on track
Once you know your entire pension wealth, you can use a pension calculator to see what kind of income you are on track for. It can give you the confidence of knowing you are on track or the time to do something about it if you aren’t.
Read more: How to maximise your retirement income
Looking more widely, the government’s ongoing Pensions Review is looking at how to deliver better outcomes for members. Moves to reduce lost pensions and the proliferation of small pots will help ensure much needed pension savings do not go astray.