Pension planning basics: smart steps toward a secure retirement

27 February 2026

Written by Retirement Line

Whether retirement feels decades away or just around the corner, taking a few practical steps today can make a meaningful difference to your financial future.

New research suggests that just 42% of people are clear on how to plan for their retirement. As reported by MSN, this includes just 45% of over-55s. The news comes less than a year after Standard Life reported it found that a third of over-55s are confused about pension options. 

Research like this underlines the case for targeted support, which is due to be rolled out from April 2026 as a new type of help for people who currently do not seek or cannot afford financial advice.

But whether you access targeted support, guidance or advice, there are steps you can take to get your pension planning in better shape. Some of these don’t have to be complicated or time-consuming. Even small actions may help you build momentum toward your retirement goals. 

If your schedule is packed and you don’t have time to comb through lengthy guides, the following pointers will help you get started and steer you to further help.

As always, please remember that this article is for general information only and does not constitute personal financial advice. It does not take into account your individual circumstances or objectives. Please get proper assistance with your pension planning, such as professional advice from a regulated financial adviser.

Understand your State Pension forecast

The State Pension forms the foundation of many people’s retirement income in the UK. Make sure you know what you’re likely to receive and when you can claim it.

You can check your State Pension forecast on the government website. This will show you:

• Your estimated weekly payment.

• Your State Pension age (when you can expect to start receiving your pension).

• Whether you can increase your pension by filling a shortfall in your National Insurance (NI) contributions.

The State Pension provides valuable support and can cover retirement expenses for people with modest lifestyles and little or no housing costs. But for many of us, it’s a starting point rather than the complete solution.

Get free money from your employer

If you’re employed, a workplace defined contribution pension is one of the most effective ways to build long-term retirement savings. Thanks to automatic enrolment, most eligible workers are enrolled into a pension scheme by default. 

Being in one of these schemes can make a very positive impact on your future retirement income. The contributions your employer makes are essentially ‘free money’, so they can dramatically accelerate your pension growth over time. 

But worryingly, the Social Market Foundation (SMF) found that two-fifths of full-time workers with a pension do not even know how much their employer contributes. 

When it comes to your pension contributions, they are usually taken directly from your salary, making saving consistent and effortless. However, this could lead to complacency, with some people not increasing their contributions even though they can afford to. The SMF research found that more than 4-in-10 scheme members have never changed their contribution levels. 

To get the most from your workplace pension:

• Look at your monthly budget and see if you can increase your contributions – even a few extra pounds a month may make a big difference at retirement.

• Check your employer’s pension scheme as some organisations will match your contributions up to an agreed limit, which means you can receive even more free money!

• Consider increasing your contributions when you receive a pay rise.

• Avoid opting out unless absolutely necessary.

Starting early and contributing more than the minimum is particularly powerful because of compound growth. That’s where your contributions grow through investment returns, and those returns generate their own returns over time (more on this below).

If you are retiring soon…

If you are expecting a final bonus or long service award from your employer, you may want to consider using these extra funds to contribute into your company pension. It’s a way to obtain tax relief from the government and potentially increase contributions from your employer.  

You should check with your employer if this is possible and consider taking financial advice to confirm if this is in your best interests.

Takeaway tip: You’re likely to gain a lot by staying enrolled in your workplace pension scheme and maximising your contributions (without neglecting other important financial commitments).

Get free money from the government

The government wants to reward long-term saving, which is why it gives tax relief on your pension contributions. This is effectively free money from the government – not something that happens often!

The current limit is that you can contribute the lower of these two amounts into your pension each year to receive tax relief (the free money from the government):

• 100% of eligible earnings, or

• £60,000

For basic-rate taxpayers, every £80 you contribute is topped up to £100 by the government. Higher-rate taxpayers may be able to claim even more back on their tax return.

What if I am not eligible for a workplace pension?

You get the same tax relief if you are self-employed or not working, too. That’s one of the main incentives for setting up a personal pension. Likewise, you can set up your own pension if you have multiple jobs and don’t earn enough from any of them to qualify for enrolment in a company scheme.

Unfortunately, 82% of self-employed people are not paying into a pension (according to a recent Independent article). They could be on course for a financially difficult retirement unless they have sufficient pensions from former employers, or enough savings, investments or assets to fill the income gap.

A personal pension can be a flexible and tax-efficient way to boost your retirement savings. These are defined contribution schemes (like most workplace schemes) and work in a similar way, although you need to make all the contributions yourself. 

When opening a personal pension, it helps to set a realistic annual savings target, ideally linked to your retirement goals. Ask yourself what kind of retirement income you want and work out how much of a shortfall you will have based on your current savings/investments and expected State Pension income.

If you find that you need to make contributions beyond your budget, remember that even smaller payments into a personal pension will make a difference. Why not start now with what you can afford each month and see if you can increase contributions over time? If your income is irregular, you can instead make ad-hoc payments, such as when you get paid for a big project.

Takeaway tip: Not in a workplace pension? It’s easy to open one and start to pay into it, even if you know you’ll need to contribute more in the future.

Enjoy the power of compound returns

Compounding is where the money you have gained from being invested in your pension scheme is reinvested back into your pension fund. So the money you gain immediately starts to work just as hard for you as the money you have contributed to your pension savings.

It really is a powerful way to build up your pension pot. Even small increases to your pot can add up to something much bigger over the long term.

Here is an example of the power of compounding from Aviva:

• If you invest £10,000 at the age of 25 with a 4.5% annual return, by 65 that will become £58,000.

• If you wait 10 years and start at 35, it will only grow to £37,000.

The maths are similar for pension contributions. Even modest growth today can translate into significantly larger savings decades from now. 

To illustrate the double power of tax relief and compound returns, the table below shows how a £1,000 pension contribution (plus the £250 government top-up) will grow, depending on three examples of investment returns.

As you can see, a projection of 5% growth each year doubles your £1,000 after 10 years. That level of growth isn’t guaranteed, but in September 2024, Pension Bee reported that leading pension funds delivered an average annual return of 7.7% over the past five years for those 30 years from State Pension age, and 5.27% annual growth for those five years from state pension age.

Review your pension pots 

If you are already paying into a workplace or personal pension, when was the last time you checked up on how they are doing? And if you have some pension pots from jobs you had a few years ago, are you keeping track of them also?

Regular reviews will mean you always know whether you are on track to build up the level of pension savings you want. They could be a good prompt to increase contributions if you are falling short.

It’s also a good idea to keep an eye on how your investments are performing and whether your risk level still suits you:

• Younger pension savers may want to take a more adventurous approach to investment risk, as short-term losses are usually offset by longer-term gains. 

• Those nearing retirement may prefer a more cautious approach to minimise the risk of a market slump significantly affecting their pension pot.

You may also want to consolidate multiple pension pots built up over your career into a single scheme. This may make your savings easier to manage and reduce fees. However, always check whether your current schemes offer valuable guarantees or exit charges before consolidating. See our guide for more information: When should you consolidate pension pots?

Takeaway tip: At the very least, review all your pension schemes once a year to reassure yourself that you’re on track, or to highlight adjustments that could strengthen your future finances.

Find your missing pensions

It’s surprisingly easy to lose track of old pension pots, especially if you’ve changed jobs several times or moved home. Even small forgotten pensions can add up over the years.

Before you start tracking down any of your old pension schemes, gather as much information as possible, such as the names of previous employers or pension providers. 

See our guide for more information: How to trace lost pensions. This includes details of government-backed services that can help you find lost pension pots. 

Once you've located them, you can decide whether to leave the funds where they are or consolidate multiple pots into a single pension scheme.

Takeaway tip: Finding a missing pension is a bit like discovering money you didn’t realise you had. It could give your retirement plans a welcome boost.

Look beyond pensions

Retirement planning isn’t always just about pensions. It can mean building a diverse range of savings, investments or other assets to help generate flexible, tax-efficient and sustainable income beyond your pension pot. 

Don’t overlook the role that some of your non-pension assets might play in your retirement, such as:

• Savings. If you have money in savings accounts, is it in the best place? The Social Market Foundation reported last year that about £430 billion of excess cash is being held by Brits in low-interest savings accounts and cash. 

• Investments. Options such as general investment accounts (GIAs) and offshore bonds/trusts may be worth considering, potentially playing a part in your tax planning as well as building income in retirement.

• Property. It’s not for everyone, but could downsizing one day to release equity from your home play a part in your retirement planning? Or if you want to stay put, maybe equity release might be a ‘plan B’ to consider?

• Employee benefits: Assets in a workplace share scheme such as a share incentive plan (SIP), save as you earn (SAYE) scheme or company share option plan (CSOP) can sit alongside your pension savings. You may also be able to transfer money from a workplace share scheme into your pension.

• Spouse/partner assets. If you have a spouse or partner, there could be advantages in coordinating to ensure you are both making the most of opportunities such as annual ISA allowances and tax bands. 

Takeaway tip: Think outside the pensions box. Do you have a complete picture of all the potential sources of income that could support your retirement plans? 

Don’t do it on your own - seek professional guidance or advice

For straightforward situations, managing your pension independently may feel perfectly comfortable. But professional advice can be extremely valuable, especially if your finances are more complex, such as involving multiple pensions, property or investments. 

A qualified financial adviser can help you:

• Estimate how much income you’ll need in retirement, such as forecasting income and expenses. 

• Decide when you might be able to retire, possibly modelling plans that include retiring earlier than you thought, or perhaps reducing working hours in the run-up to full retirement.

• Understand tax implications of your current plans and suggest alternatives for greater tax efficiency where appropriate. 

• Look at your current investments and discuss whether spreading risk across different types of investments is prudent.

• Explain your ‘at retirement’ options for turning your pension savings into income, such as with annuities and income drawdown. 

Other support and information might include:

• A conversation with Pension Wise, the government-backed service that offers free impartial guidance to over-50s about their options for taking money from any UK-based ‘defined contribution’ pension - see our guide to Pension Wise for information.

• Retirement Line’s annuity quotes and information service for when you want to see how much guaranteed income you can expect from your pension savings. 

Takeaway tip: Feeling unsure or overwhelmed by retirement planning? It may be a sign that it’s time to talk to a professional. Initial conversations with a qualified adviser and other experts could help you build a clear, practical plan you feel confident about.

Planning today for your ideal tomorrow

Pension planning is one of the most important financial steps you’ll ever take, yet it doesn’t require perfection to be effective. What matters most is getting started and building good habits over time.

By understanding your State Pension, making the most of workplace contributions, opening a personal pension where needed, and reviewing your progress regularly, you can move steadily toward the retirement you want.

Remember: your future lifestyle is shaped by the decisions you make today. Even if retirement feels far away, your later self will thank you for the preparation.

If you haven’t already, why not take one small action this week? Check your forecast, review your contributions, or trace an old pension. A few minutes now could make a lasting difference to your financial security — and help you look ahead to retirement with greater confidence.