Generation X increase pension saving

Generation X made the biggest contribution to personal pensions last year, according to new research by Salisbury House Wealth.

People nearing retirement age tend to accelerate their personal pension contributions, the wealth management provider said. They are at the peak of their earning potential, and boosting their pension saving can help compensate for under-investment in previous years.

Figures show that Generation X, classed as those aged 43-54, contributed £3.7bn in the last year, an increase of 14% from £3.2bn in the previous year. This represents 43% of all personal pension contributions last year -- the most of any age group.

However, the average pension pot among this cohort is still only 37% of what is needed for a comfortable retirement, Salisbury House Wealth says.

The firm calculates that, with a retirement age of 67 and a life expectancy of 82, the average saver will need £19,000 per year to retire comfortably. To achieve that level of retirement income, those in Generation X would need to have already saved £187,400 as of this year, but the average pension wealth of this age group stands at approximately £70,400.

"There is a big gap between what individuals need to have saved into their pension pot by this point and what is actually the case," Tim Holmes, managing director of Salisbury House Wealth, told Pensions Age.

"When you start saving is just as important as how much you save each year," he added.

"In order to have saved enough by your mid-fifties, you need to start saving early. Incrementally building a private pension pot and investing with sensible long-term outlook will take you a long way to having the buffer you need when you finally reach retirement age."