We use cookies to give you the best possible online experience. If you continue, we’ll assume you are happy for your web browser to receive all cookies from our website. See our cookie policy for more information on cookies and how to manage them.


Why it pays to start your pension early

Video transcript

You know the old saying, “the early bird gets the worm”?

Well, that’s very much the case when it comes to your pension.

Let’s say you started one at the age of 33 and invested a hundred-and-fifty pounds a month in it.

If your pension pot grew at 2.4% a year, after taking inflation and charges into account, you could have around a hundred-and-six-thousand pounds in it if you retired at 68.

Not bad.

But what if you started when you were ten years younger? If you did that, you could end up with around a hundred and fifty thousand in your pension pot.

That’s around forty-four thousand pounds extra in your retirement nest egg… yet you’ll only have paid in eighteen thousand more yourself.

Of course, this is only an example, and the actual rate of any growth can’t be guaranteed. Like most investments, the value of your pension can go down as well as up and you could get back less than invested.

The reason starting early can be such a good idea is partly thanks to the magic of ‘compounding’ – which is where any investment returns you make can themselves earn returns. Combined with the extra money you’ve paid in yourself, it can make a big difference to the amount you end up with.

And the sooner you start, the bigger the effect can be.

When you’re young, it can be hard to think about the future. But if you want to boost your chances of a better retirement, starting your pension early is a bit of a no-brainer really. Well, unless you’re a real bird brain.

You might have heard this before, but the earlier you start paying into a pension plan, the better. Wondering why? Watch our short video to find out.

When you’re younger, it can be tempting to put things like starting a pension on the back burner. After all, retirement’s ages away, right? But by delaying just a little, you could be losing out a lot.

A pension plan is a long term investment and you normally can’t access any benefits until you are 55. The value of investments can go down as well as up, and you may get back less than invested.

Here are four reasons why you might want to think about starting yours sooner rather than later:

1. More tax relief from the government

The sooner you start your pension, the more you’ll receive in tax relief. For every 80p you pay in, the government adds 20p – boosting your total contribution to a pound. And while that might not sound a great deal, it can really add up. For example, let’s say you started your pension at the age of 23 and paid in £150 a month. You could get £4,560 more in tax relief than if you’d waited 10 years (if you’re a basic rate tax payer). And £9,120 more than if you’d delayed for 20 years.

This example shows how much a basic rate tax payer might receive get in tax relief. Higher and additional rate payers may be able to claim even more. Your tax treatment depends on your individual circumstances as well as tax rules, which are subject to change.

2. Extra contributions from your boss

On top of tax relief, if you’re in a workplace pension scheme, there’s a good chance your employer will be obliged by law to help you save for your retirement. So if you put off joining the scheme for whatever reason, you’ll be missing out on contributions from your boss.

3. More time for your money to potentially grow

The money in your pension pot doesn't just sit in a vault somewhere, gathering dust. Instead, it's invested. This means it has the potential to grow over time. And the earlier you start your pension, the more time it has to do this.

4. Avoid getting hit in your pocket later on

Finally, if you do put things off a few years, there’s a good chance you’d have to pay a higher amount into your pension each month to achieve a similar result to that if you’d started sooner. So by starting earlier, you’ll be doing your future self a favour.

Taking the first step

People sometimes put off saving for the long term because they think they’re not earning enough to make it worthwhile. Yet the truth is, even paying a small, regular amount into your pension can make a big difference to your future finances.

Left things a little too late?

While it’s worth starting your pension early, don’t worry if you’ve left things late. Here are some things you can try to give your pension pot a boost.

How to boost your pension pot

How to get the retirement you want

Five simple steps you can take to boost your chances of getting the retirement you want.

Find out more

BR01194 09/2016

Next article

Tools & calculators

Use our handy tools and calculators to help you plan for your future.

Pensions explained

Puzzled by pensions? Get the lowdown on everything you need to know.


Already have a pension with Aviva? Monitor it online at the touch of a button with MyAviva.

Back to top