The long and winding road–pension contributions emerge as a priority late in saver’s financial journeys

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• Standard Life customer research finds pensions only a top three priority between age 50 and 59
• Saving towards homeownership dominates for younger groups
• Debt, day-to-day finances, and kids the focus for those 35-49
• Savers in their 40’s risk falling in a pension gap, but have time to recover

Pension contributions aren’t a top priority until pension savers reach their fifties, according to new customer research1 from Standard Life, part of Phoenix Group. The study examined how Standard Life customer’s financial priorities shift as they move through life, with each lifestage characterised by their own pressing issues.  

Saving for a home is the top priority for those 18-34, which tallies with the average age of first-time buyers now being 342, while for those in their teens and twenties saving for holidays was also an important consideration.   

As savers start to take on more financial responsibilities like mortgages, paying off debt hits priority no.1 between the ages of 35 and 39, and stays in the top three until the age of 54. Other more middle-aged considerations start to emerge too with the cost of supporting children and family as well as day-to-day living costs unsurprisingly ranking highly between the ages of 35-50.  

 

Peak interest in pension contributions between 50-59 

It’s only once savers hit the age of 50 that pension contributions move into their top three financial considerations. It would seem saver’s 50s is the time period when the prospect of retirement really moves into view and they prioritise their pension up to the age of 59 at which point its relevance starts to fall again.  

 

Do we have a problem? 

Thanks to the introduction of auto-enrolment in 2012, most younger savers will have time to build up a level of retirement savings without pensions ranking highly on their list of financial priorities. However, the current minimum auto-enrolment contributions of 8% of salary (5% employee, 3% employer) are unlikely to provide a decent standard of living in retirement for most.  

There’s also a danger that many people in their 40’s - who rank pension saving fairly low as a priority - will be caught in the gap between the decline of Defined Benefit (DB) pensions, in which retirement income was guaranteed by an employer, and Defined Contribution (DC) pension provision via auto-enrolment. Standard Life’s recent Retirement Voice research found that ‘Baby Boomers’ and older, those over 60, were almost twice as likely (39%) to have a DB scheme than ‘Gen X’, those between 44 and 59 (22%). At the same time, the majority of Gen X’ers (54%) are worried their finances won’t cover their retirement, compared to 31% of Baby Boomers.3 However, people in this age group are likely to be towards the top end of their earning potential, so if they do choose to increase their pension contributions they have a good chance of closing some of the gap before retirement.  

Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group said: “It’s not unusual for pensions to take a backseat to more immediate financial priorities until later in life. This isn’t necessarily a problem, as long as you’re keeping an eye on your pensions savings along the way and making conscious decisions about your retirement when necessary. Taking a look even once a year and checking whether your current pot and level of contributions are likely to provide you with your expected standard of living in retirement, is a good start. There are several online pension calculators that can help.  

“In an ideal world, starting early and increasing contributions gradually in line with any pay rises or financial boosts like bonuses can make a huge difference to your eventual pot and resulting retirement income. However, it’s never too late to increase your contributions. We recently calculated that someone who chose to increase their pension contributions by 3% to a total of 11% (8% employee, 3% employer) from the age of 45 could build up a pot £32,000 bigger than someone who contributed the minimum level through their career, in today’s prices. Someone who had no pension savings at all until the age of 45 could build up a similar pot to someone who had contributed the at minimum level throughout their career by contributing 18% of their salary from 45 until retirement4.”   

ENDS

Media enquiries

For further information, photos, video content or interviews, contact:

Darragh Leeson/James Merrick
Senior PR Manager/PR Manager  
Standard Life, part of Phoenix Group
07707 270001 / 07974 063067 
darragh_leeson@standardlife.com / james_merrick@standardlife.com

 
Notes to Editors

¹ Standard Life’s Customer Needs survey ran from 10th July to 4th August, 2024. The sample size was c. 6,200 Standard Life customers 

² Government statistic for first time buyers’ age Chapter 3: Housing history and future housing - GOV.UK 

³ Standard Life’s Retirement Voice Report 2024 Retirement Voice | Standard Life 

⁴ assuming 3.50% salary growth per year, and 5% a year investment growth. Figures allow for 2% inflation. Annual Management Charge of 0.75% assumed. The figures are an illustration and are not guaranteed. Earning limits not applied.  Government statistic for first time buyers age 

Calculations assume the following:  

Starting Salary	£25,000
Starting Age	22
Investment Growth	5.00%
Salary Growth	3.50%
Annual Investment Cost	0.75%

About Standard Life 

Standard Life is a brand that has been trusted to look after peoples’ life savings for nearly 200 years.

Today it proudly serves millions of customers who come to Standard Life directly, through advisers and through their employers’ pension scheme.

Standard Life is part of the Phoenix Group, the largest long-term savings and retirement business in the UK. We’re proud to be building on nearly 200 years of Standard Life heritage together.

Our products include a variety of Pensions, Bonds and Retirement options to suit people’s needs, helping our customers to invest and save for their future. We’re proud to offer a leading range of sustainable and responsible investment options.

We support our customers on their journey to and through retirement with comprehensive, easy-to-understand guidance so they can invest in the right way for their needs, and plan a future they feel confident about.

The value of investments can go down as well as up, and may be worth less than originally invested.