You are here: Home - Retirement -

Pension delay could cost early thirties £300,000

Written by:
People are significantly limiting their retirement income by putting off pension planning until their early 30s, according to Friends Life.

Its Workplace Savings Index has calculated a 32-year-old who puts £162 a month into a pension until age 65 will have a projected retirement income of about £287,000.

This is less than half the pension pot (some £605,000) that would be built up by somebody making the same contributions from age 22.

The index said the funding gap could also cost early 30s £58,000 in additional contributions made to increase their pension before retirement.

But the statistics have also revealed many people under 30 have failed to match their contributions with inflation since the first quarter of 2009.

The index showed overall, average contributions now stand at £283 a month, but inflation is eroding the value of investments and the value of contributions.

Martin Palmer, head of corporate marketing benefits, Friends Life, said: “The reality is that contribution increases, most likely the result of salary increases, aren’t big enough.

“Failing to beat inflation, the value of the monthly contribution as well as the value of a member’s investment over time is being eroded.”

Pensions are also being hit by ‘double defaulting’, which is when an individual joins a company scheme but does not actively select a fund or the contribution rate they pay.

Palmer said: “To reverse this decline, auto-enrolment will need to do more than rely on inertia to encourage people away from ‘double-defaulting’ and to proactively take charge of their contribution levels.”

Tag Box




Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Insurance Experts: Are you fully insured? Click here to get a quote.

For a free quote or to speak with an insurance expert call 0800 1218744

Diesel cars: do they still have mileage for drivers?

Diesel cars have come under the spotlight as the government plans for vehicles to go green by 2040. If you’re...

Shhhh….‘niche’ lenders offer mortgages up to 6 times borrowers’ income

Some smaller lenders have quietly increased income multiples used to calculate the maximum mortgage they can o...

Your essential guide to 2018 tax allowances

A host of annual allowances and thresholds in England and Wales are set to change this year. Our 2018 guide he...

Ryanair jetting towards US flights for £10

Ryanair is on course to achieve its long-held ambition of offering transatlantic flights to the US – and the...

Investing in car parks: a good vehicle for income seekers?

As the search for income continues, many investors are turning to alternatives, with car parks becoming increa...

Tesco expected to post significant write-offs

Tesco is predicted to unveil the biggest loss in its 100-year history, according to analysts.

Results round-up: Companies to watch this week

Mulberry and more will face the music this week.

Product launches of the week

Select Property Group, Schroders, Leeds Building Society and more have exciting news this week.

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
French postpone fines for motorists until next year

Fines for drivers on French roads, who are caught without a breathalyser kit, will now be implemented in March 2013.