Pensioners across the UK could significantly enhance their retirement funds by conducting a simple review of their monthly bank payments, new analysis suggests. A routine check for unused direct debits could potentially add tens of thousands of pounds to a pension pot over time.
The Cost of Forgotten Payments
Research from pension provider Standard Life reveals that the average Briton wastes £39 every month on direct debits for services they no longer use or need. This silent drain on finances, often from old subscriptions or memberships, accumulates to a substantial sum over the course of a year.
The firm's analysis demonstrates the powerful impact of redirecting this wasted money into a pension. For someone who started work at age 22 with a £25,000 salary and made the standard minimum auto-enrolment contributions, the projected retirement fund by age 68 could be around £210,000.
A Simple Switch for a Major Boost
However, by identifying and cancelling those redundant £39 monthly payments and instead funneling that cash into their pension, the same individual could see their fund grow to an estimated £247,000. This represents a remarkable increase of £37,000 in today's prices.
The potential gain is even greater for those with more wasteful subscriptions. Someone wasting £78 per month—roughly the cost of a gym membership, premium video streaming, and music service—could boost their final pension pot by a staggering £73,000.
Expert Advice for a Financial Health Check
Mike Ambery, Retirement Savings Director at Standard Life, commented on the findings. "Unused direct debits have a habit of quietly draining our bank accounts in the background," he said. "The new year is often a time people focus on their physical health, but it’s also the perfect moment to think about your financial wellbeing too."
He emphasised that redirecting just a few forgotten payments could make a meaningful positive impact on one's financial future, particularly due to the benefits of tax relief and compound investment growth over decades.
Ambery also issued a crucial warning: "It is important to double check terms and conditions of cancelling any direct debits or subscriptions to avoid potential penalties or impact on your credit scores."
He concluded with an encouraging note for those early in their career, stating, "If your retirement is decades away, pensions might not feel urgent but small changes made early on can have an outsized impact... A financial reset in January can make a meaningful difference to the income you’ll have in later life."
