Pension savers shouldn’t allow inertia to drive their chosen savings strategies, Hargreaves Lansdown has said.

Discussing the effect of default bonds for pensioners, Hargreaves Lansdown personal finance analyst Sarah Coles stated that while there is nothing wrong with this option, “if savers are going to make the right decision, they cannot let inertia be the driving force in their savings strategy”.

Coles advised that rather than “taking the path of least resistance”, savers should focus on rate, access, time and effectiveness when it comes to their pensions saving and investment strategy.

With these, Coles explained that savers are encouraged to shop around for competitive rates and should consider when they may need access to their funds when selecting their investments.

“If you have tied it up for a period, you may not be able to access it before the maturity date. There are also some easy access accounts which offer only a limited number of withdrawals in return for a higher rate, so consider when and how you may need to withdraw cash,” Coles said.

Following on from previous investments, Coles highlighted that while these may have been fixed for a certain period of time, savers must take into consideration their present situation when selecting a new investment and not follow what they opted for previously. Savers may need cash to be more accessible, to be tied up for one year or they might not need it for five years and want to remain invested, she noted.

In addition, to make savings as effective as possible, it is advised that funds are divided to form a portfolio approach.

“It means you only have what you need in easy access, fixed for the short term, and fixed for up to five years. Once you are looking to tie up the money for 5-10 years or more, if you are prepared to take more risk with your money, you can consider stock market investments. This will put your capital at risk, but over this time horizon, your money has more potential to grow than it would in a savings account,” Coles concluded.

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