I’m 30 and opted out my pension from 22 to 26. I worry about the hit to my retirement

In our Pensions Crisis Coach series, we aim to help ease your retirement worries. Are you concerned you’re not saving enough for your later years? Do you want to know if you have enough to retire or don’t know how to find your lost pensions? Email us at money@theipaper.com. We’ll seek to get you on the right track with help from some of the best financial experts and advisers in the business. Daniella writes… I am 30 and have around £15,000 saved into my pension, solely through workplace saving. My conundrum mainly centres on the fact that between 22 and 26, I opted out of pension, and am very angry about it. I’m doing everything I can to boost my savings and catch up, but feel very frustrated at the decisions made by past me. I think what I need to know – to stop myself worrying – is: is there anything they can do to completely make up for the time I’ve lost? And will it really cost me in retirement? Shorts Callum Mason, the i Paper’s deputy money editor, responds: I can massively sympathise with your predicament, because it aligns closely with something I’ve done myself. I have written about how I opted out of my pension for about two and a half years after leaving university. After back and forth on email you said that you were earning around between £28,000 and £32,000 when you opted out – far less than you earn now, and your decision at the time was mainly financial – you felt like you needed the extra money. The good news is, you’ve now realised your mistake and are trying to make up for it. You are contributing 8 per cent of your salary to your pension – way above the minimum required under auto-enrolment rules – and your employer is matching your contribution. There’s no hard or fast rule on how much of your salary you should be contributing to your pension, though a lot of providers suggest around 15 per cent as a rule of thumb. You and your employer are collectively paying in 16 per cent, which is, of course, above this. Secondly, you are only 30, and already have a pension worth £15,000, which will likely continue to grow relatively fast as a result of your contributions. Fidelity figures suggest that the average pension pot at 30 is around £18,800, so you’re actually not that far behind, and with your large contributions, you will hopefully continue to catch up with your peers. But your question isn’t really about worry about whether you will have enough for retirement, it’s more about frustration over the decision you made in the past. So, I asked Jessica Chantler, a chartered financial planner at Quilter, to assess how much that decision will affect you in the future. She was able to offer a balanced assessment – saying that while four years of missing contributions is not “insignificant”, it did not mean your retirement plans would be derailed.Having around £15,000 is “already saved is a great start,” she said. “At age 30, the earliest you will be able to access your pension is age 57, which gives you approximately 27 years for further contributions and investment growth. That is a positive, as time remains your greatest advantage. Identifying a potential shortfall now is very different from discovering one in your 50s, when there is less opportunity to respond,” she explained. She said your decision to contribute 8 per cent of your salary to your pension, with your employer matching this, was “strong”, but she also offered some extra tips, that could prove useful. You mentioned contributions in your email to me, and the fact you had consolidated all your pension money into one single pot, but what you didn’t discuss is where your cash is actually invested. Jessica says to look at this.“It is worth reviewing how both pensions are invested, including their charges and fund choices. With a 27-year horizon, you have the capacity to withstand short-term market volatility and focus on long term growth however the level of risk must remain appropriate for your circumstances with a considered tolerance for losses. Trying to ‘make up’ the lost years by taking more risk than you can comfortably tolerate is unlikely to be worth the sleepless nights,” she said. Generally, your workplace pension will be invested into a default fund, but you can choose to invest in either riskier options – that will broadly include more equities – or less risky options. With close to 30 years until the earliest date you can access your pension, most experts would say it’s reasonable to take some risk. Riskier investments – up to a point – tend to have the potential to grow quicker and if there’s a dip in your investments, you’ll have plenty of time to catch back up before you retire. It may be worth taking a look at the options provided by your provider and seeing what you’re comfortable with. What else can you do going forwards? Jessica says you may consider slowly increasing the amount you pay in to your retirement fund as your wage rises. “A manageable monthly amount, reviewed after pay rises or bonuses, may be more sustainable than an aggressive short-term catch-up plan,” she says. Her overall message, is not to be too hard on yourself. “Give yourself credit for recognising the issue and acting after four years; many people wait decades longer. You are already taking sensible steps to get back on track so don’t let regret about the four years you missed distract you from the 27 years you still have,” she explains.