High net worth savers failing to maximise pension allowances, finds Saltus

Fewer 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.