A man managed to boost his pension pot by £11,000 in eight months without increasing his monthly deposits.
Scott Dixon, 54, turned his £34,000 private pension into more than £45,000 by consolidating pots and changing his investment style.
Mr Dixon, who runs a complaints resolution site told the i paper that he pays just £50 a month into his pension per month, and hasn’t increased this amount.
Instead, he realised he had six pension pots from various past jobs, the largest being £13,000 and the smallest a mere £30 from a temporary role.
After taking the decision to consolidate the funds, Mr Dixon invested the pot into a self-invested personal pension (SIPP) for more flexibility in managing his money.
He then invested £27,400, or 75 percent of his pension, into stocks. Despite acknowledging the risks, his “calculated” investments paid off, earning him £10,680 in just eight months.
The process of merging the pensions was slow and frustrating, with Mr Dixon noting that he felt providers made it unnecessarily difficult but encouraged others not to be deterred from taking control of their pensions.
While his pension pot isn’t large, Mr Dixon said he doesn’t plan to retire.
He enjoys his work and also benefits from being mortgage-free since 2014, a move he considers more valuable than building his pension earlier.
Looking ahead, Mr Dixon said he plans to withdraw £3,000 annually from his pension to “enjoy the money,” as he has no debts or loans.
His advice to others is to start thinking about pensions early, contribute as much as possible, and ensure their employer is adding to the pot.
Tom Selby, director of public policy at AJ Bell, told i that while taking more risk with investments can lead to higher returns over time, it’s not guaranteed. He noted that riskier strategies come with greater volatility, so it’s essential to be comfortable with that uncertainty.
Mr Selby also stressed the importance of diversifying investments to avoid “having all your eggs in one basket.”
