Britons could significantly boost their retirement savings by taking a simple step: cancelling forgotten direct debits. New analysis reveals that redirecting the cash from unused subscriptions into a pension pot could add tens of thousands of pounds, helping more people achieve a comfortable retirement.
The Hidden Drain on Your Finances
According to pension provider Standard Life, the average person in the UK wastes close to £40 every month on direct debits they no longer need or regularly use. These often include streaming services, dormant gym memberships, and old insurance policies.
Mike Ambery, retirement savings director at Standard Life, warned: "Unused direct debits have a habit of quietly draining our bank accounts in the background." He emphasised that redirecting just a few of these forgotten payments could make a meaningful positive impact on your long-term financial health.
How Small Changes Create a Major Pension Boost
The potential gains from this simple financial tidy-up are substantial. Analysis shows that a 22-year-old entering full-time work on a £25,000 salary, who pays only the minimum employee pension contribution, could build a pot of around £210,000.
However, by finding and cancelling £39 of unused monthly payments and putting that money into their pension instead, their final retirement fund could grow to approximately £247,000—an increase of £37,000. Those who can redirect around £78 per month could see their pot grow by an impressive £73,000.
"If your retirement is decades away, pensions might not feel urgent," Ambery noted. "But small changes made early on can have an outsized impact thanks to tax relief and the potential power of compound investment growth." He also urged savers to check terms and conditions before cancelling to avoid penalties or impacts on credit scores.
Other Ways to Revive Your Retirement Savings
Beyond scrutinising direct debits, there are other effective methods to enhance your pension. A major opportunity lies in tracking down lost pension pots, with an estimated £31bn locked away in around three million forgotten accounts in the UK.
As the end of the tax year approaches, checking your allowances is another smart move. Most people can contribute up to £60,000 annually (or 100% of earnings if lower) into their pension and benefit from tax relief. Savers can also carry forward unused allowances from the previous three years, which is particularly useful after a pay rise or bonus.
Ambery concluded: "It’s worth checking whether you can make your money work harder." With a growing number of people, as highlighted in a survey for Pensions UK, aiming to take more active control of their pensions, these strategies offer a practical path to a more secure retirement.
