Younger consumers who delay the start of their pension saving by just five years could be reducing their eventual retirement fund by nearly £45,000, according to new findings by AXA*.
Almost one-fifth of workers in the 18-24 age bracket resist investing in a pension, because they believe their retirement is too far off, Axa said. However, a 24-year-old earning an average salary of £16,000 who delays five years before starting a pension, assuming that his contributions would have been 3% per year, will have reduced his eventual pension fund by £44,362, Axa said.
Pensions inertia not confined to the young
The problem of neglecting retirement planning is by no means confined to the young, however.
Recent research** indicates that almost 40% of UK workers have no pensions provision in place, and that the tendency to ignore your pensions provision tends to be higher in women than in men.
Halifax has stated that of those who do save for a pension, most do not begin until they are 32, and save on average £59 a month. However, they list their desired retirement age as 58. On that basis, their pension fund is likely to be worth £54,814, which factoring in inflation is £28,380 giving an annual income in retirement of just £1,716.
*Source: AXA in-house research, November 2009
** Source: Baring Asset Management, Oct 2009
