Delaying pension saving by 10 years could double contributions needed, study finds

Delaying pension saving by 10 years could more than double the annual contributions needed to achieve the same retirement outcome, according to analysis from WEALTH at work.

Its calculations found that someone contributing a total of £2,400 a year to their workplace pension from age 25, including employee and employer contributions, could accumulate £167,426 by age 55, assuming annual investment growth of 5%.

However, someone who delayed saving until age 35 would need to contribute £4,825 a year for the remaining 20 years to reach a similar pension pot of £167,520 by age 55.

The analysis comes as research from WEALTH at work found that 83% of UK workers with a defined contribution (DC) pension were concerned cost of living pressures would leave them less comfortable in retirement because of a pension savings shortfall, up from 81% last year.

Concerns were particularly pronounced among younger workers, with 46% of 18 to 24-year-olds and 41% of those aged 25 to 34 believing they would never be able to afford to retire, compared with 38% across all age groups.

Jonathan Watts-Lay, director at WEALTH at work, said: “There are currently around 15 million people in the UK who are under saving for retirement, and this could rise to 19 million without action.

“Pension Awareness Day is an ideal opportunity to turn concern into action.

“By providing clear and tailored financial education, employers can help their employees to see the value of their workplace pension.