26 October 2006
Research carried out by NOP on behalf of HSBC Bank shows that
graduates risk halving their income in retirement if they delay
saving in a pension until they are 30.
The research found that half of 16-24 year olds believe they are
too young to be thinking about pensions. It also found that 90% of
16-24 year olds and 44% of 25-34 year olds are not making any
contributions to a pension, with the trend being for people to wait
until their mid-30s before they start taking a pension
seriously.
The number of 35-44 year olds who are making some kind of
pension contributions has risen from 55% of those questioned in
2005 to 69%, while the number of 45-64 year olds who say they are
saving for retirement has also increased by 17% from last year to
66%.
However, HSBC has warned that delaying saving until the mid-30s
can be expensive for graduates. Someone who starts paying £75
a month into a pension at the age of 21 can retire on an annual
income of £12,700 a year. Waiting until 30 to make the same
contribution sees a retirement payment of £6,470 a year, less
than half what they could achieve if they started putting money
away at 21.
Ian Martin, head of pensions and retirement income at HSBC,
said: "Paying even a small amount into a pension can make all the
difference in retirement - a monthly contribution of £75, for
example, represents just four per cent of the median monthly salary
of graduates starting work this year.
"And by increasing contributions in line with salary increases
year-on-year, graduates could retire with a pension fund of
£337,000, twice what they would have if they started making
contributions at age 30."
