Don't put it off

It’s important to start saving into a pension as soon as you can. The earlier you start, either by investing a lump sum or by paying regular contributions, the more time your pension pot has to grow and the greater chance you have of achieving your ideal retirement income.

We've provided some examples below that show the earlier you can start saving into a pension, the better it might be for you in the long-run. These examples are based on buying an annuity, however this is just one way of taking benefits from a defined contribution pension. For more information on your options, visit our accessing your pension pot - what are your options? page.

It pays to start saving now

The table below gives you an idea of how much you might need to contribute every month to get an annual pension income of £5,000 when you’re 65 in today's terms, assuming you use your pension pot to buy an annuity. This projection takes into account the effects of inflation, uses the Financial Conduct Authority's standard mid growth rate (2.4% a year) and excludes any State pension you may also receive. You can see how much more you would need to save each month by starting your pension later.

Age now25354555
Monthly contribution (gross) £269 £349 £501 £947


Annual pension income - the cost of delay

This table shows how delaying starting your pension could affect your potential income at retirement, if you were to use your pension pot to buy an annuity. The table assumes a contribution of £150 gross a month from the age of 25, 30 and 40 with a retirement age of 65. As you can see, a delay of just five years could potentially reduce your retirement income in today's terms. Think about how this could affect your lifestyle in retirement.

AGE PENSION STARTEDLOWER REAL GROWTH RATE
(-0.5% A YEAR)
MID REAL GROWTH RATE
(2.4% A YEAR)
HIGHER REAL GROWTH RATE
(5.4% A YEAR)
 25  £1,030  £2,760  £7,630
 30  £1,010  £2,440  £6,020
 40  £906  £1,800  £3,570


Please see the important information below for the other assumptions we've made in the above examples.

Start your pension now

Find out about our Stakeholder Pension now.

Use our contributions calculator to help you work out how much you should save now to achieve the lifestyle you want in retirement.

The value of pension investments may fall as well as rise. Any investment you make into a pension plan will be tied up until you take your benefits. Benefits can normally be taken from age 55 to 99.

Important information

When reading the examples, it’s important that you consider the following:

  • These figures are only examples – they’re not minimum or maximum amounts. You could get back more or less than this. The size of your pension pot will depend on the contributions you make, how well the investments in your pension pot perform, and the charges taken from your plan. 

    If you choose to buy an annuity, your pension income will depend on the size of your pension pot, the annuity rates available at the time and the payment options you select. We have assumed the annual pension income will be paid at the start of each month, will remain at the same level throughout its payment and will stop when you die.
  • The examples are based on contributions being made into the Multi-Asset Fund using the Financial Conduct Authority's standard nominal growth rates, adjusted for 2.5% a year inflation, to give real growth rates of -0.5% a year for the lower rate, 2.4% a year for the mid rate and 5.4% a year for the higher rate.
  • When a negative (-) sign is shown in front of a growth rate it means that the assumed return of the investment will not keep pace with inflation. In other words the buying power will decrease.
  • We use 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 Multi-Asset 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 pension pots may be converted into pension income. The rates used for converting the pension pot into pension income assume an interest rate in retirement of -0.7% a year for the lower rate, 1.3% a year for the mid rate and 3.3% 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 Conduct Authority to reflect market changes.
  • 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 examples assume that your pension pot is within the current Lifetime Allowance.
  • A tax-free cash lump sum of up to 25% of the pension pot may be taken when you take your benefits but will reduce your pension income.