In Focus: Retirement Income  

IFS sets out later-life pension contributions plan

But Steven Cameron, pensions director at Aegon, warned that leaving pension saving until later on in life risked leaving individuals short at retirement, particularly if earnings don’t rise and expenses don’t fall with age.

Cameron said while nudging individuals to consider contributing more to their pension at certain points across their life was a good idea, the wrong message must not be given to young savers.

He said: “We must avoid sending out any message suggesting it’s OK for younger workers to delay thinking about pensions until later in life. 

“While retirement may seem far off for this group, it’s the contributions paid at younger ages which have longest to benefit from compound investment growth. It’s also risky to assume that earnings will necessarily rise or financial pressures disappear later on in life. 

“Many younger people are taking longer to get on the housing ladder and having families at a later stage, which could mean their financial pressures could extend well into their 50s or even 60s. If earnings don’t rise and expenses don’t fall with age then reducing or delaying pension saving in youth risks individuals falling far short in retirement.”

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