A new report commissioned by HSBC Bank shows that people who delay paying in to a pension fund until they are 30 are likely to end up with only half the pot of those who begin saving when they are 21.
The report, quoted by IFA Online, puts forward the scenario of a 21-year-old that pays GBP75 into a pension fund each month, with an annual increase in contributions of 4%. According to the report, this saver would be likely to end up with a total pension pot of just under GBP340,000. This contrasts with the person who begins paying in to a similar pension scheme at 30 but ends up with a final pot of just over GBP170,000.
Despite the clear long-term benefit of an earlier start to pension contributions, the current situation does not bode well for a future populated with well-off pensioners. The report found that only one in 10 16 to 24-year-olds, and less than half of 25 to 34-year-olds, currently make any contributions to a pension scheme.