In 2012, the Government launches its Personal Accounts scheme in response to the fact that seven million people are currently under saving for retirement.

Personal Accounts is the Government’s solution to solving the ‘pension crisis’, offering all Britons a workplace retirement savings scheme for the first time.

Under the new scheme, employees will contribute a minimum of four per cent, matched by a minimum three per cent employer contribution and around one per cent in the form of normal tax relief from the State.

Those who already have a company pension will be automatically enrolled on it.

But Fidelity International says that instead of waiting for the scheme to launch, if the average 25 year old who takes a cautious approach to retirement started saving £300 a month now, they could be as much as £175,000 better off when they retire.

Those who save £200 a month would add an additional £117,000 to their pension pot, or even saving £100 a month from now on would amass £58,000 extra by the time they start drawing their pension at age 65.

Starting a pension in 2009, rather than waiting three years, could also benefit 30 year olds, Fidelity International says, accruing an extra £128,000 by saving £300 into a pension a month from now on, £85,000 if they saved £200, or an extra £43,000 if they started saving £100 a month.

“Personal Accounts in 2012 will see a big shake up for both companies and employees but a real concern is the prospect of people sitting back until they are forced to save – especially when many will be feeling bruised and battered by the credit crunch,” said Julian Webb, head of UK defined Contribution Pensions at Fidelity International.

“Starting early simply gives people the opportunity to build a bigger pot by retirement – it also puts people in a better position to recover from falls in stock markets and interest rates. I’d suggest anyone with access to a company pension scheme but who decided not to join should reconsider that decision now.”

As an added incentive, Mr Webb reminds those not yet taking part in a company pension scheme that they usually include “free money”, due to the employer’s contribution.

Based on employer contributions of 6.3 per cent, workers who are earning the average wage of £26,020 could get an extra £136 paid into their pension scheme.

And, Mr Webb added, “If they choose to add in their own money as well then the Government will bump this up with tax relief.”

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© Fair Investment Company Ltd