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Most HNWIs face major pension shortfall for comfortable retirement – Saltus

Research showed that people with over £250,000 in assets thought an average pension pot of £663,308 would give them a comfortable retirement. 

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High-net-worth individuals (HNWIs) in the UK are not saving enough for retirement, with many underestimating how much they will need, according to Saltus.

Research from the Saltus Wealth Index showed that people with over £250,000 in assets thought an average pension pot of £663,308 would give them a comfortable retirement. 

However, the Saltus Pension Calculator found most people will need at least £1.5m, rising to £2.5m for younger savers, to match the income target set by the Pension and Lifetime Savings Association (PLSA).

One in five thought a pension pot between £401,000 and £600,000 would be enough, and 13% thought less than £400,000 would do. 

The gap between what people have and what they need ranged from £250,000 to £950,000 depending on age. 

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Even when the state pension is included, many people over 54 will still fall short.

On average, respondents had £520,052 in their pension, and were making annual contributions of around £30,000. 

Saltus found that, based on a cautious 4% annual investment return, most people will not have enough to retire at 67 on £44,000 a year. 

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At age 44, the average pension pot is £498,276 with annual contributions of £35,105. 

The forecasted pot is £2,269,286 but the amount needed is £2,562,215, leaving a shortfall of £292,929. 

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At age 54, the average pot is £532,906, contributions are £30,239, and the shortfall is £738,296. 

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Meanwhile, at age 64, the average pot is £518,119 with £17,025 contributed each year, leading to a shortfall of £952,027. 

When taking the state pension into account, the shortfall for 54-year-olds is £193,634 and for 64-year-olds is £526,538.

Only 8% of respondents were using their full £60,000 annual pension allowance. 

Average planned yearly contributions have risen from £28,198 last year to £30,018, but this is still not enough. 

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One in eight of those supporting adult children or grandchildren are already raiding their pension pots or cutting contributions to help family.

Saltus has launched a free Pension Calculator to help people check if they are on track for the retirement income they want. 

Mike Stimpson, partner at Saltus, said: “We’re seeing a clear disconnect between expectation and reality in retirement planning. 

“Many high earners assume they’re on track, but the findings suggest otherwise. 

“It’s concerning that most people are falling short of their retirement goals, especially as pension pots are increasingly used to support family or cover rising living costs.”

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Stimpson added: “Planning is further complicated by Inheritance Tax changes from April 2027, when unused pensions and certain death benefits will count towards an estate. 

“This could make pensions less attractive as a wealth transfer tool, particularly for high net worth individuals who rely on them to pass on wealth.

“Still, the £60,000 annual pension allowance remains a powerful way to build wealth tax-efficiently, but with demands on savings coming from many directions, planning is more important than ever.”

He said: “That’s why we created the Saltus Pension Calculator to help people make better informed decisions about their financial future.”

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