'Add up to £37,000 to your pension' by 'redirecting' payments

Scrapping unnecessary direct debits could significantly bolster Brits' pension pots, as more people aim to curb superfluous expenditure to enhance their retirement savings. The typical Brit squanders nearly £40 each month on redundant or seldom-used direct debits, such as streaming subscriptions, gym memberships and outdated insurance policies, according to research by pension provider Standard Life.

However, cancelling these direct debits and funnelling the funds into a pension could potentially inject an additional £37,000 into the pot, nudging more people towards a comfortable retirement. A survey commissioned by Pensions UK reveals that an increasing number of individuals are striving to take a more proactive approach in managing their pensions, as financial advisors persistently warn about the perils of inadequate retirement savings, as reported by City AM.

Mike Ambery, retirement savings director at Standard Life, said: "Unused direct debits have a habit of quietly draining our bank accounts in the background. Redirecting just a few of those forgotten payments into your pension could make a meaningful positive impact to your financial future."

Benefits of ditching direct debits

Data indicates that for someone entering full-time employment at 22 with a salary of £25,000, making the minimum employee contribution to a pension could amass a pension pot of £210,000. However, by rerouting £39 of unused monthly direct debit into a pension, retirement funds could swell to £247,000.

Those choosing to cancel subscriptions worth double that figure - approximately £78 - could potentially boost their pension pot by £73,000.

Mr Ambery explained: "If your retirement is decades away, pensions might not feel urgent but small changes made early on can have an outsized impact thanks to tax relief and the potential power of compound investment growth."

He encouraged savers to carefully review the terms and conditions before cancelling any direct debits or subscriptions to prevent possible penalties and negative effects on credit ratings.

Tracking down forgotten pension pots

Beyond redirecting unused direct debits, Britons can also enhance their retirement funds by locating abandoned pension pots.

Approximately three million pots remain unclaimed across the UK, with roughly £31bn sitting dormant as workers often neglect to transfer their pension when changing employers. As the tax year draws to a close, reviewing allowances could further enhance retirement savings.

Mr Ambery said: "It's worth checking whether you can make your money work harder. Most people can contribute up to £60,000 a year, or 100% of their earnings if lower, into their pension and benefit from tax relief."

Workers can also utilise unused allowances carried forward from prior years, proving especially beneficial for those who've secured a salary increase or received a bonus.