Who has got the UK's biggest pension pot?

RBC Brewin Dolphin said it had made a Freedom of Information request for data on the country’s top pension savers as tracked by the Office of National Statistics (ONS).

According to the files, the top saver is sitting on pension wealth of around £11m, an amount the adviser said could spin-off an annual income of £540,000.

According to figures compiled in 2022, statisticians estimated that some 929,000 savers had accrued pension wealth of between £1m and £2m, with 128,000 sitting on pensions worth £2m to £3m, and 46,000 investors in the £3m plus wealth bracket.

The ONS estimates you need to havepension wealth of £374,500 to be among the top 10 per cent of retirement savers, with the median or typical figure standing at £637,500.

The wealth manager calculated someone looking for a comfortable retirement required at least £37,300 per annum to live on and to hit that target, the retiree would need a pension wealth of £630,000.

Rob Burgeman, investment manager at RBC Brewin Dolphin, said: “Building a war chest for retirement can seem extremely daunting at first, but money saved regularly over long periods can produce quite dramatic results, as the ONS data demonstrates."

 “Whatever your income, there are a couple of powerful weapons to be aware of in your armoury when planning for retirement.

 “Making use of tax reliefs is crucial: a basic rate taxpayer saving £80 of take-home pay into a pension gets a £20 top-up from HMRC, making a total investment of £100 — or an instant return of 20%. As Paul Daniels used to say, ‘that’s magic.’

Pension compounding

 “Then there’s the mathematical phenomenon of compounding, or interest on your interest. Albert Einstein called it ‘the eighth wonder of the world’ — and who are we to argue with the great man.

 “Factoring in tax relief, a £100-a-month plan would only actually cost an investor £80 per month, bringing total contributions to £9,600 after ten years.

 “But as your pot grows you are gaining interest on your increased amount, meaning your pension wealth could balloon to £15,592, assuming 5 per cent annualised returns after fees.

“These days thanks to employer contributions and auto-enrolment, it’s possible for people even on modest incomes to reach millionaires’ row by the time they retire.

“Someone entering the workforce today aged 18 and paying £389-a-month into their pension could reasonably expect to retire with a £1million pot aged 68 assuming annualised returns of five per cent after fees.

“In the first decade, the investor’s pot could grow to £60,181 based on investments of £46,680. Ten years later their nest-egg could have more than doubled in size to £158,210 based on contributions of £93,360. And after 30 years, they could have accumulated £317,889 on investments of £140,040.

“By the time they’ve clocked up 40 years in the workforce, they could be sitting pretty on a retirement fund of £577,990 based on contributions of just £186,720.

“But it’s in the last decade before retirement that the millionaire jackpot finally becomes a reality. After 50 years, the pot could well have smashed through the seven-figure mark on contributions of just £233,400.

“The figures leave little doubt that compounding can be like rocket fuel for your pension. And if you don’t live to spend it all, you can usually pass it on to the next generation without losing anything in inheritance.”

“Remember, pensions are one of the most tax-efficient ways of funding your retirement. A £10,000 contribution costs a basic-rate taxpayer £8,000, and a higher rate taxpayer just £6,000 due to tax savings.”

Most Brits have no idea what sort of pension they need

Over half - 54 per cent -  of Brits don’t know how much money to set aside for a comfortable retirement – with 3 in 10 unsure of how to grow their savings. 

More than 4 in 10 have also admitted to not regularly contributing to an employee-sponsored pension scheme, according to a survey of over 700 UK adults carried out on behalf of the financial adviser firm deVere Group.

Nigel Green, chief executive of deVere, said: “One way to boost your retirement income is for savers to check they are claiming money to which they are rightly entitled. A leading charity, Age UK, says that each year £3.5 billion goes unclaimed by older people that should otherwise be paid to pensioners, and some of that money might be yours. The charity’s benefits check calculator can help those missing out on money."

“People need to be saving and investing from as early an age as possible, essentially as soon as they start their careers, even with the smallest contributions. It's the development of the saving habit which is most key”.