Pension delay can cost £13,000 a year
12 May 2003
Legal & General has issued a warning to consumers that they would be losing up to £35 every day from pension funds by delaying for only a year.
The warning comes as recent reports show that Britons are leaving it later before they start saving, partly as a result of the current uncertainty in the stock market.
Andy Agar, Legal & General Director of Pensions Marketing said, 'It is vital that people don't delay starting their pension savings, because the contributions in the early years of their plan are the most important as they remain invested the longest.'
For example, the estimated pension fund for someone aged 25 investing £100 per month (gross) until age 65 would be £197,000. If they delay starting for just one year, their estimated pension fund would be £184,000 - a reduction of £13,000 - equivalent to £35 every day over the one year's delay (or a seven per cent reduction on pension fund). A delay of five years would result in an estimated pension fund of £140,000 - a reduction of £57,000 (or 29 per cent).
Mr Agar continued, 'These figures show how important it is to start pension savings as soon as possible, although we realise that some people may currently feel unsure about not only where to invest their pension savings, but whether to start saving at all.'
He stressed that 'pension planning is a long-term commitment' and one that should be considered regardless of the economic climate. He advised consumers to look for pension plans that offer 'wide investment choice and competitive charges.'