Standard Life News

Impact of delay in starting a pension

The longer you delay starting a pension plan, the more it costs to produce the same fund. For example, if you start contributing €200 pm to a pension plan at age 30, increasing in line with earnings, it might produce a retirement fund of about €205,000 at age 65.

But if you delay starting until a later age, the initial contribution required to produce the same fund at 65 increases sharply:

For example, if you delay starting the pension plan for just 6 years, i.e. until age 36, you will then have to start contributing at €282 pm to the pension plan to produce the same estimated fund at 65 as you might get by starting your pension now at age 30 at a €200 pm contribution.

If you delay starting until age 40, then you will then have to start contributing at €363 pm to the plan to produce the same estimated fund at 65. In each case the initial contribution is assumed to increase in line with your earnings over the period to age 65.

So delay costs money, your money.

Source: Technical Guidance

[1] assuming a 2.75% pa return, after charges and expenses, and that your earnings will grow by 2.5% pa. This projected fund and initial monthly contributions are an illustration and are not guaranteed. The actual maturity value and monthly contributions required to produce that maturity value could be higher or lower than shown as they will vary by your actual earnings growth and investment return, after charges, achieved.