Some pension savers could wear capes, according to new analysis from PensionBee, which has identified the emergence of ‘super savers’. The analysis found a wide gap between the average pension savings and those at the top of the spectrum for individuals within the same age group.
Recent discussions on wealth disparities have focused on generational divides, emphasising how young people in general struggle to accumulate wealth as compared to their older counterparts. However, this new research uncovers a significant, yet less discussed, issue: the stark disparities in intragenerational pension saving.
According to PensionBee customer data, today’s youngest working generation (Generation Z, born between 1996 and 2012) has an average pension pot of £2,304. In sharp contrast, the top 10% of Gen Z’s have saved an average pension pot of £10,407. This indicates that these ‘super savers’ have saved over four times the amount of their average peers.
This disparity only grows with age. The average Millennial (born between 1981 and 1996) pension pot stands at £12,150, while the top 10% of Millennials have accumulated an impressive average of £62,694 in their retirement accounts, more than five times that of their average peers.
Meanwhile, those closest to or at the age they can access their pension, Generation X (born between 1965 and 1980), have an average pension pot of £33,263. Whereas the top 10% of this age group have amassed an average of £168,550 in their retirement accounts, again more than five times that of their average peers.
PensionBee also surveyed 1,000 people who self-identified as having saved ‘somewhat more’ or ‘significantly more’ than average and found that taking advantage of matched employer contributions (27%) was the most popular method for boosting their savings. Other popular options included reducing monthly expenses to help save (20%) and increasing pension contributions after receiving a bonus or pay rise (19%).
Becky O’Connor, Director of Public Affairs at PensionBee, commented: “It’s never too late to take charge of your pension savings, regardless of your retirement ambitions or age. Here are some helpful tips to help boost your pension savings.
Consider consolidating your pensions where it makes sense to do so. Not only will this help you assess if you’re on track for the lifestyle you want in retirement, but it can also reduce the burden of monitoring numerous pension accounts. Unfortunately, it can be easier to lose track of old pensions than you may think as almost 1 in 10 workers believe they’ve lost a pension pot worth more than £10,000 during the course of their career.
Consolidation allows for greater fee transparency, meaning you’ll only have to pay one set of fees. A saving of just 1% could have a significant impact on the ultimate pension pot you retire with.
Increase your pension contributions by 1 to 2% where possible. Even a small increase can make a difference over time and the power of compound interest means the earlier and more you save, the more your money will grow. Regularly review your finances to see if you can gradually increase your contributions, especially after pay raises or reductions in other expenses.
Regularly review where your pension is invested. Different investment options carry varying levels of risk and potential returns. As you get closer to retirement, you may want to shift your investments to lower-risk options to protect your savings. Conversely, when you’re younger, you may opt for higher-risk investments with the potential for higher returns.”
Appendix
Table 1: Pension pot values per age group
| Average pension pot value (£) | Average pension pot value of the top 10% (£) | |
|---|---|---|
| Generation X | £33,263 | £168,550 |
| Millennials | £12,150 | £62,694 |
| Generation Z | £2,304 | £10,407 |
Source: PensionBee, May 2024. Based on a total customer base of c.250,000.
Table 2: How do you boost your pension? Select all options that apply.
| Response | % of respondents |
|---|---|
| My employer offers matched contributions | 27% |
| I reduce my monthly expenses so I can save more | 20% |
| I increase my contributions if I receive a pay rise or bonus | 19% |
| I make voluntary additional contributions each month | 19% |
| I use online pension calculators to set and track goals | 14% |
| I utilise salary sacrifice schemes to increase my contributions | 13% |
| I allocate income from my side hustles into my pension | 12% |
| I review and adjust my investment strategy regularly | 12% |
| I consult an independent financial advisor for personalised advice | 10% |
| I invest in higher risk funds that sometimes come with higher returns | 9% |
| My partner and/or family members contribute to my pension | 7% |
| I read books/articles and/or attend workshops or seminars on retirement planning | 7% |
| I reinvest tax breaks into my pension | 6% |
| Other | 3% |
Source: PensionBee, July 2024. Based on a nationally representative sample of 1,000 UK adults, aged 18 to 55 who self-identify as having saved ‘somewhat more’ or ‘significantly more’ than average into their pension for their age group. Numbers have been rounded.
