The cost of delay.

It pays to start saving now

It’s important to start saving for a pension as soon as you can afford to. Starting early gives you a better chance of building up the pension fund you need for the retirement you want. Even if you’ve already got a pension, you should make sure you keep it on track. As the amount you earn changes, so might your retirement goals.

If you can invest additional money into your pension sooner rather than later, either by a lump sum or regular monthly contributions, this will give your investment more time to grow. The larger your fund is, the greater your chance of achieving your desired retirement income.

Why save now?

The table below gives you an idea of how much you would need to contribute to get an annual pension income of £10,000 when you’re 65. Don't forget that inflation could reduce what you can buy in the future with the amounts shown below. A growth rate of 7% a year has been used.  

The message is clear. The earlier you can start saving the better.*

The cost of delay

The following examples show how delaying starting your pension could affect your potential income at retirement. The table assumes a contribution of £150 a month from the age of 25, 30 and 40 with a retirement age of 65.   

Annual pension income

As you can see, a delay of even five years can significantly reduce your potential retirement income.

The value of pension investments may fall as well as rise and is not guaranteed. Any investment you make into a pension plan will be tied up until you take your benefits. Benefits can be taken from age 55.

* When reading the example illustrations, it’s important that you consider the following:

• These figures are only examples and aren't guaranteed – they’re not minimum or maximum amounts. What's paid depends on how your investment grows and on the tax treatment of the investment. You could get back more or less than this.
• The examples are based on contributions being made into the UK Equity Index Fund using the Financial Services Authority's standard growth rates.
• Legal & General uses lower growth rates for any fund where we feel it gives a more realistic indication of future returns. If you choose not to invest in the UK Equity Index Fund, and therefore choose one or more of the other funds available, different assumed growth rates may apply.
• All firms use the same rates to show how funds may be converted into pension income. The rates used for converting the fund into pension income assume an interest rate in retirement of 0.9% a year for the lower rate, 2.9% a year for the mid rate and 4.9% a year for the higher rate. These assumed interest rates are subject to review every year on 6 April using a method prescribed by the Financial Services Authority to reflect market changes.
• Your pension income will depend on how your investment grows and annuity rates at the time you take your benefits. It will be paid at the start of each month and will remain at the same level throughout its payment.
• As annuity rates assume that females will live longer than males, this is reflected in the amount of pension income that can be bought.
• The projections are based on our current charges for the Direct Stakeholder online pension. Changes to our charges will affect the future benefits you receive.
• The illustrations assume the pension funds are within your Lifetime Allowance.
• The pension incomes illustrated assume that, if you die, your pension will not provide any income for your spouse, registered civil partner or dependant.