New research from Lloyds Bank reveals that saving just £180 a year from the age of 20 could bolster your pension pot by £44,000 by the time you retire. This is due to the tax relief and interest growth benefits that pension contributions enjoy.
The bank discloses that the average total annual saving is around £180, which, thanks to tax advantages, would increase to £225 if invested into a pension. Any contributions made to your pension – whether workplace or private, excluding your state pension – attract tax relief at your highest marginal rate.
Basic rate taxpayers receive 20 percent tax relief, higher rate taxpayers can claim 40 percent, and additional rate taxpayers get 45 percent. Robert Cochran, a retirement expert at Scottish Widows, has calculated how much you could gain by the time you retire, assuming the saved amount increases by 2.5 percent annually and that the fund grows at four percent after charges.
It’s projected that someone who starts saving at 20 will have amassed £44,414 by the age of 65, while the fund stands at £25,071 for someone who began saving at 30. This figure falls to £13,083 if you start saving at 40, and £5,827 if you begin at 50.
Mr Cochran emphasised the importance of early savings, stating: “It shows that saving early and regularly even small amounts can end up having a big impact – the most important thing is to get in the habit early”, reports the Mirror in an exclusive.
This advice comes as Lloyds Bank introduces a new service called Ready-Made Pensions, allowing customers to merge their existing pension pots or start a new one directly through their mobile banking app or internet banking.
Customers of Lloyds Bank, Halifax, and Bank of Scotland will be the first to benefit from this innovative feature, which offers the convenience of consolidating up to ten pension pots, tracking pensions, and receiving a customised pension plan based on their age and retirement goals.
