Jessica BirdFewer than one in 10 high net worth individuals (HNWIs) contributed the full £60,000 pension allowance last year, despite widespread concern that the Government could target pension tax relief in next month’s Budget, according to new data from the Saltus Wealth Index.
The survey of 2,000 HNWIs with at least £250,000 in investible assets found that just 9% made the maximum pension contribution last year, with only 14% planning to do so this year.
Average annual contributions stood at £31,794 in 2024, rising only slightly to £34,190 this year, suggesting that most wealthy savers are not taking full advantage of the tax benefits available.
The under-contribution comes despite 38% of respondents fearing changes to pension relief and 48% expecting the Government to introduce new forms of wealth taxation.
On average, HNWIs’ pension pots currently stand at £660,300, well below the amount needed to fund the £98,189 annual retirement income respondents said they expect.
According to the Saltus Pension Calculator, a 50-year-old with a £600,000 pension and annual contributions of £34,000 would still face a £300,000 shortfall against their desired retirement income, even with consistent 6.25% annual returns.
The research also shows that 33% of respondents are considering inheritance tax (IHT) protection strategies, while 29% are using trusts or other vehicles to reduce exposure.
Financial pressures are playing a role in limiting contributions, with 76% supporting adult children and 56% helping elderly parents, while 71% of those with children in private schools say VAT on fees has affected their finances.
Henrietta Grimston, chartered financial planner at Saltus, said: “It’s clear from our latest data that even those with significant wealth are struggling to plan effectively for retirement.
“Many high earners underestimate what they’ll need to maintain their desired lifestyle and aren’t making the most of the generous allowances available.
“Rising costs, intergenerational support and ongoing uncertainty about tax policy all make it harder to prioritise long-term planning.
“With speculation that pensions relief could be targeted in the next Budget, now is the time for individuals to review their strategies and make sure their savings and investments are working together to meet their future goals.”
Saltus said the findings highlight the need for more comprehensive, flexible retirement planning that considers pensions alongside ISAs, property, business assets and intergenerational wealth transfer.
