According to a new report by Money Mail, thousands of women may find that their returns on private pensions may be lower due to the change to their official retirement age.
Those most likely to be affected are workers approaching the end of their careers, whose pension fund is moved into safer, but less profitable investments.
This latest blow comes after women were told that they could lose income from their state pension following the Government’s decision to increase the state pension age for women from 60 to match men at 66 in 2020 and then to 67 by 2028.
Those identified in The Mail’s report are pension holders who are experiencing so-called ‘lifestyling’, which is done towards the last 15 years of person’s working life to prevent their pension savings being invested in riskier, but potentially more profitable, investment schemes.
It is thought that many schemes have failed to appreciate the change to the retirement age, which means that many women may miss out on up to seven years of higher income unless they amend their plans.
Money Mail points out that “if an average pension pot of £50,000 is ‘lifestyled’ seven years too early, then the owner could miss out on returns of £9,357 over the course of retirement — or £327.50 a year.”
Considering Money Mail’s findings, experts are calling for a review of all policies.
Former pensions minister, Steve Webb, said: “Providers should be ensuring customers are not caught in this trap, and savers should review their policies to check the retirement plans they set out years ago reflect the new situation.
“Thousands of women will have taken out private pensions when they expected to draw their pensions at 60.
“If they and their pension provider have not revisited this plan, there is a risk that their investments will have been switched into a cautious ‘pre-retirement’ mode up to seven years too soon. This could knock thousands off a typical pension pot.”
It is recommended that women approaching retirement in the next 15 years review their scheme so that they are taking full advantage of their pension pot.