Expert issues urgent warning and 3 must-do tips for every Brit with a pension

Pension savers across the UK have been issued an urgent warning and three essential tips to help them make the most of their retirement pots - and keep their hard-earned money safe from scammers.

The Pension Freedoms legislation, introduced in 2015, has given savers more flexibility than ever before, allowing those aged 55 and over to access their pots early and withdraw varying amounts when needed. However, experts warn that the freedom can also muddy the waters, leaving many at risk of making costly mistakes or falling prey to fraudsters. Kundan Bhaduri, an entrepreneur at The Kushman Group, explained: "Pension freedoms just mean the freedom to blow the lot before your bus pass even arrives." Sharing a few tips to minimise the risks and boost pots, Mr Bhaduri said: "Consolidate and interrogate any old pensions gathering dust-and probably being nibbled away by fees."

Many people have multiple pension pots from different jobs, and leaving them unmanaged can lead to unnecessary charges and poor investment performance. Consolidating can make your pots easier to manage, reduce fees (as those with several pots will be facing maintenance charges by multiple providers), and possibly boost returns by having a larger pot to invest.

However, consolidation isn't always the right move for everyone. Before merging pensions, check for any valuable guarantees or benefits you might lose, and always seek professional advice.

Mr Bhaduri also warned about the growing threat of pension scams. He said: "And for pity's sake, if an unsolicited call promises to 'unlock' your pension, it's your wallet they're aiming to unlock."

Pensions are a hotspot for scammers because the sums involved are often significant, and fraudsters use increasingly sophisticated tactics to trick people into transferring their savings. The Financial Conduct Authority warned that if you're contacted out of the blue about your pension, it's almost certainly a scam.

Banking giant NatWest also raised the alarm about this issue recently. It urged pension savers to be cautious of unexpected calls about access their pots, as it's most likely to be a scam. It added: "Even if it's legitimate, early withdrawal could result in charges. Check with your pension provider using contact details on their website."

In another common tactic, they may frame the scam as an investment opportunity.

NatWest said: "If someone calls you out of the blue offering you an investment scheme with attractive returns for your pension pot, then it's likely to be a scam."

Finally, Mr Bhaduri urged savers to be cautious about dipping into their pension pots too early. He said: "Don't spend your pension before you've even properly retired."

Many underestimate how long their retirement will last and how much money they'll need to maintain their lifestyle. Experts recommend creating a detailed retirement budget and seeking advice to ensure your pension lasts as long as you do.

The Pensions and Lifetime Savings Association (PLSA) regularly publishes estimations of how large a pension pot should be to achieve certain standards of living, including minimum, moderate, and comfortable. Its latest findings, released in early 2024, show that the total annual income needed for the different rankings increased significantly in just one tax year.

Based on calculations from the 2023/24 tax year, the PLSA said to achieve the "minimum" standard of living, a single person would need an annual income of £14,400 (£15,700 in London), while a couple would need £22,400 (£24,500 in London).

To achieve a "moderate" living standard, which comes in addition to the minimum lifestyle but provides more financial security and more flexibility, a single person would need £31,300 per year (£32,800 in London), while a couple would need £43,100 (£44,900 in London).

A "comfortable" standard of living would require a single person to have an annual income of £43,100 (£45,000 in London), and a couple would need £59,000 (£61,200 in London).

Sharing a few more tips for those aged over 50, Mr Bhaduri said: "If you are over 50, verify your State Pension now. Don't trust, verify!"

Additionally, he added: "Decimate any debt you have built before you hang up your boots, and if your house is bigger than your needs, flog it."