While pensions might not be the most exciting topic of conversation, ignoring your future financial security can turn out to be an expensive mistake when you stop working.

For many people, pensions fall firmly into the “too difficult” box, leaving them uncertain about where their savings are going, how much they ought to set aside, or whether their current trajectory will result in the retirement they want.

However, taking time to understand your retirement pot and making smart, well-considered choices remains essential to securing a better quality of life in your later years.

Ahead of Pension Awareness Day (September 15), we spoke to Susan Hope, retirement expert and business development director at Scottish Widows.

She highlighted five of the most common mistakes people make with their pensions, and shared her top tips on how to avoid them.

1. Leaving free money (employer matches) on the table

“So many people, especially young people, are unaware of their employer contribution to their pension and this is one of my biggest bugbears,” says Hope.

“For example, my nephew called me and said he wasn’t going to join his workplace pension scheme because £83 per month felt too expensive to him, but he didn’t know he was on a double match scheme.”

Opting into these schemes can be extremely beneficial because a double pension match scheme is a workplace pension benefit where your employer contributes twice the percentage that you pay in, up to an agreed maximum limit.

“For example, it you pay 5% of your salary towards your pension, your employer will add in 10%, so it’s really worth maxing that out and taking advantage of that free money,” says Hope.

Therefore, Hope stresses the importance of taking the time to understand your workplace pension contribution structure – and to have a conversation about this with your partner too.

“If you’re in a partnership, unmarried or married, make sure that as a household you understand where you can get access to that free money,” advises Hope.

2. Not knowing where all of your pensions are

A study carried out by the Pensions Policy Institute (PPI) estimated that there are now 3.3 million lost pots in the UK, containing £31.1 billion worth of assets.

These lost pensions are estimated to be worth an average of £9,470 – rising to £13,620 amongst the aged 55-75 cohort.

“There’s so many reasons why someone could have lost track of their pension. Over a lifetime people can have up to 11 jobs and you can lose track of them through moving house, changing name, or if the company consolidates, changes its name or goes bust,” explains Hope.

Recovering old savings directly increases your total wealth for later life, so Hope suggests going through your employment history.

“Go back through your CV and make sure that you’ve got a monetary amount sitting somewhere in a pension for every period of employment,” advises Hope.

“If you don’t know who the provider is but you do know the employer, then email the employer or use the government’s pension tracing service.

“It’s like finding £10 down the back of the couch, but so much better.”

Many banks and pension providers now offer pension tracking schemes.

“If you are a Scottish Widows customer, you can use our tracing service,” says Hope. “Via our app you can put your previous employers in, and our app will scurry off and find any lost pensions.”

3. Not keeping your life admin up to date

Not updating your pension beneficiary forms means your money might go to an ex-spouse or the wrong person, cause long delays for your family, and bypass your actual final wishes.

“There’s so many blended families in the UK, and you might not love who you loved five years ago, so make sure that your nomination of beneficiaries are up to date,” advises Hope.

“This ensures that if anything happens to you, your hard-earned money will go to the right person at the right time. It takes around 38 seconds to nominate your beneficiary through the Scottish Widows app.”

She also recommends checking that your name and address is up to date on all your pension pots. Keeping all these details current ensures you receive yearly statements, do not lose track of your money, and can access your funds easily when you reach retirement.

4. Opting out or delaying adding to your pension

Delaying pension contributions means you lose time for your money to grow.

Modelling research from Scottish Widows Women and Retirement Report 2024 estimated that removing the £6,240 lower earnings limit and reducing the age requirement from 22 to 18 could increase the future pension pot of an average 18-year-old woman by £47k.

Reflecting on these figures, Hope says: “That is absolutely huge, especially if we think about it in the context of the gender pension gap.”

In addition, the Women and Retirement Report 2025 highlighted that a one percentage-point increase in pension contributions sustained across a career can offset a five-year career break.

“This shows that small things really do make a difference,” says Hope. “Compound interest is your best friend, as is the free money over the long term.”

Hope recommends having conversations about this with the whole family.

“I think it’s a really good idea to have small bite-size conversations about this at the time that is right for your children,” says Hope.

“That way when they enter the working world or a relationship, they will have a good financial grounding.”

5. Taking money out in a tax-inefficient way

“A common mistake is to prematurely withdraw from your pension without having a good understanding of how that affects your tax,” says Hope.

She recommends taking a holistic look at all of your finances before making any rash decisions instead.

“Look at all of your finances – including your property, your pension and all your other assets – because you can’t just look at something in a silo, you have to think about tax efficiency,” says Hope.

“If you don’t feel equipped to make that decision, then you should seek advice, whether that be through an advisor or through MoneyHelper, formerly the Money Advice Service.

“You need to make sure that you are fully equipped with all the information that you need to make an informed decision.”