Pension savings cut in half if savers delay, Confused.com warns Go compare with our comparison table

Pension savings cut in half if savers delay, Confused.com warns

20 January 2010 / by Andy Davies

Pension pots could be cut in half if savers delay saving for their retirement, Confused.com has warned.

New research by the price comparison website has revealed that if people start putting aside £200 each month from the age of 25 to 65, assuming an average interest rate of five per cent gross, people could save more than £306,000.

However, Confused.com has found that people, who begin saving the same amount 10 years later aged 35, can expect a nest egg of around £167,000.

Meanwhile, for those who start saving even later at the age of 45, their pension pot will be reduced by more than a half, down to an estimated £82,000.

Commenting, Gemma Stanbury, head of savings at Confused.com said: "It's staggering how important the early years of saving are. Compounded interest means that the earlier you start, the easier it is to build up a substantial savings pot for the future."

Despite the base rate remaining at a record low, Ms Stanbury believes providers are still offering "enticing rates".

She added: "Of course it could be difficult to find a savings account to offer five per cent on an ongoing basis at the moment; so it's vital to shop around for the best rates available and use your cash ISA allowance each year, to keep as much as possible in out of the grasp of the tax man."

© Fair Investment Company Ltd