Average Pension Pots in the UK

To get a better look at average pension pot sizes in the UK, check out the table below to see a breakdown by age.

Source: ONS (Table 6.8)

As you can see, there’s a big jump between some of the younger and older brackets. This is largely because most people start maximising their earning potential after reaching 30.

When you’re earning a higher salary, it means more money goes into your pension. This happens even if your contribution percentage stays the same throughout. Also, you’re more likely to prioritise your pension as you age.

You might be wondering why the average pension size drops after 55 to 64. This is because the data from the ONS is looking at untouched pensions. Fewer people over 65 are likely to have not touched their pension.

Those who haven’t accessed their pension pots (in the 65+ bracket) may have smaller pots and are probably leaving it as long as possible. This gives their pension pot the maximum time to grow before it gets used.

The data from the ONS shows some mixed results. For example, the average UK pension pot for the 55 to 64 age bracket has grown from £91,200 (April 2016 - March 2018) to £107,300 (April 2018 - March 2020). This means there’s been an average increase of £16,100.

Whereas, in the younger age brackets, there’s been a fall in UK pension wealth across the same timeframe:

Source: ONS (Table 6.8)

Unfortunately, this is the most recent data available from the ONS. So it’s hard to get an accurate idea of the average pension pot size in the UK in 2023. However, we may get some more info shortly. Keep your eyes peeled.

This may sound obvious. How much you contribute to your pension throughout your working life makes a massive difference. Put in as much as possible if you want to maximise the size of your pension pot when retiring.

The more you contribute, the larger your pension pot should be. If you pay into a private pension scheme, how much you pay into it will likely increase over time.

This happens because even if your contribution percentage stays the same (5%, for example) - your contribution in pounds will increase if your salary goes up.

If there’s no change in your salary, you may want to contribute a higher percentage (if you can afford it). But realistically, you should be seeing some sort of wage increase between the ages of 18 and 66.

If not, you’d notice a huge decrease in your standard of living due to inflation.

How your pension portfolio performs isn’t entirely down to your decisions, but your choices do have a significant impact.

It’s worth having a basic understanding of how the stock market works. This will give you a better idea about what you can achieve with your pension pot. And more importantly, the steps you can take to adjust course.

Most people don’t even realise that their pensions are basically an investment portfolio. You can’t control the market, but you should have some choice over your pension investments.

In your younger years, it might be worth focusing on growth. This often means investing more of your pension into equities. Then as you age, gradually adjust your pension portfolio to focus less on growth and more on lowering your risk and reducing volatility.

Most people usually do this by increasing the portfolio allocation over time to invest in more ‘stable’ assets like bonds. But as we saw last year, bonds don’t provide the safe haven they once did.

You can get a decent understanding of pension investments through your own research. But, it may be worth seeking professional advice if it all seems too complicated and you want some guidance.

The length of time you save into your pension makes a massive difference to the final size of your pot.

Typically, your best chance of growing your pension pot is to start early and be consistent. Over your working life, even small contributions in younger years will have a lasting effect due to the power of compound interest.

Don’t stress if you’re already further down the road in your career. You can still make up for lost time by increasing your pension contribution. But the most affordable way to do things is to start saving into your pension as soon as you can.

All employers in the UK must offer a workplace pension scheme, known as ‘automatic enrolment’.

Under auto-enrolment, the following must apply:

• You’re classed as a ‘worker’.

• You’re aged between 22 and state pension age.

• You earn at least £10,000 per year.

• You usually work within the UK.

With the current system (from April 2019), the minimum your employer pays is 3%. You’d then have to contribute 5%. Meaning your total pension contributions would be 8%.

However, some employers pay more than the minimum. This could mean you pay lower than 5% if you want to reach the minimum of 8%. But you can really increase your pension pot size if your employer pays a higher percentage and you also contribute at least 5%.

This isn’t something you can always request from your company. Yet, if you’re having a pay review or looking to move jobs, it might be worth negotiating a higher pension contribution.

This should all happen automatically. But it’s worth knowing what (if any) tax relief you should get, especially if you’re self-employed or have a slightly complex pension structure.

For example, if you pay money into a SIPP (self-invested personal pension) - you should receive an automatic government top-up of at least 20%.

It depends on your tax bracket, as higher and additional-rate taxpayers can claim back more.

Here’s a summary showing how pension pot sizes compare throughout different regions of the UK:

Source: ONS (Table 6.17)

There are some major differences across regions. One of the most surprising figures is London. Considering wages tend to be higher in the capital city, the average pension pot size is lower than most areas.

At the bottom of the table is the average household pension pot size for the whole of the UK. So you can compare how your area stacks up against the national average.

Salaries and wages can differ throughout the UK. However, the cost of living can also vary wildly.

Even though some areas like London might pay more, you’re more likely to have higher living costs. And perhaps less money to save in your pension.

The main factors contributing to regional fluctuations include:

• Wages and salaries.

• Employment patterns (and the major types of employment in an area).

• Demographic differences (e.g. young or old workers).

It’s also worth remembering that people near retirement age (or already retired), are more likely to leave cities and move to more rural areas.

This might explain why some regions (like Wales, Scotland, and the South East/West) have higher average pension pots than places like London.

Here’s what the average pension pot size in the UK looks like when taking into account gender:

The average pension pot size for women across the UK is lower in every single age bracket. And if we just look at the average pension pot for all ages, women have £19,700 less.

This is a complex area and not something that can be fixed overnight.

As the gender pay gap tightens, we should see the pension gap draw closer. However, this may also involve men taking on more responsibility/time out of careers to look after children or to act as carers.

If this happens, we could see an increase in women’s pension value and a decrease in men’s, meeting in the middle.

We touched on this earlier. The sooner you start, the better.

It’s not always practical, and you can’t go back in time. But it’s worth saving into your pension as soon as you can.

Smaller contributions can make a massive difference over time due to the magic of compound interest.

This is basically when you earn interest on your interest, and your pension portfolio growth snowballs over time.

It’s worth paying in whatever you can afford to.

Also, ensure you’re making the most of any potential employer contributions.

If you’re self-employed or have a complex pension arrangement, take some time to double-check everything. Make sure you’re receiving all the government relief and top-ups due.

You can never guarantee success when investing your pension.

Yet, ensuring you have a diversified retirement portfolio is the best way to minimise losses and hopefully grow your pension pot over time.

With a basic understanding of investments, you can actively engage with your pension. It’s important to understand what you’re investing in and ensuring you’ve got some healthy levels of diversification.

Pensions are important. They can also be complicated.

You should take steps to understand your pension, but sometimes this isn’t enough.

Getting some professional financial advice can be the best way to keep your retirement portfolio on track.

Seeking out qualified advice is usually most useful as you near retirement age.

Not all pension schemes are designed the same way or have the same structure.

Shop around and see what’s on offer. If you find a reputable provider with a great pension scheme, it might be worth consolidating all your pensions under one roof.

If you’re using a SIPP, finding the best provider is even more critical. Sometimes with workplace pension schemes, you don’t get a choice.