Saving early in career ‘can lead to fivefold pension boost’

PEOPLE who start saving for a pension soon after starting work end up with multiples more in their retirement pots compared with those who leave it late in their working lives.

New research from Irish Life also shows that a typical de- fined contribution (DC) member earns a salary of €51,250. This person contributes 11.4pc of their salary to their pension, including the employer contribution.

The research found that someone who puts money into a pension from the age of 20 will end up with five times more in their pot than someone who begins saving in their forties.

The example assumes the same monthly contributions are made and the salaries start out the same and rise by the same percentage.

People who start saving in their twenties will end up with between 50pc and 122pc more in their fund than a person who waits to start making contributions from the age of 55.

Someone who starts pension contributions at the age of 25 can expect to accumulate a fund of €463,000.

This would give a yearly pension of €17,500 from the age of 65.

But a person who waits until they are 55 to start contributions will only end up with a fund of €85,000, to give an annual pension of €3,200.

The Irish Life research found that decisions about the likes of contributing to a pension, getting married and having children are being deferred until much later in life.

The average age of employees paying money into a company pension is now 37 as a “younger for longer” trend emerges.

Managing director, Irish Life Corporate Business, Tony Lawless said people are delaying big life decisions and enjoying their young-adult lives for longer.