The FCA has warned in a recent discussion paper that Generation X is leaving pensions savings far too late.
Salisbury House Wealth, a financial adviser, has released research suggesting that Generation X accounted for 43 percent of all UK pensions contributions last year.
The findings echo warnings from a previous paper published by the Financial Conduct Authority entitled “Intergenerational Differences” which suggested that Generation X (all people currently aged between 43-54), have not saved for their pensions from an early enough age and are now playing catch-up to remedy the situation.
Overall, the value of contributions by Generation X increased by to £3.7bn last year, up from £3.2bn in the previous year. This figure is especially significant when accounting for the fact that UK personal pensions savings last year totalled £8.5bn.
Tim Holmes, managing director at Salisbury House Wealth, said that Generation X has been caught in the crossfire of two generations contrasting ages being reliant on resources.
He said “As the FCA paper points out that many individuals in Generation X are finding their incomes squeezed by having to pay for both younger and older dependents. As a result, pensions will likely only become a priority at the last minute.”
Nevertheless, Mr Holmes reiterated the importance of saving early and stated that delaying such measures could affect the ability of investments to grow.
He said: “The problem is that the longer you leave it before you start saving for your pension the less time your investments have to grow through the “power of compounding”. Saving from an early age gives people access to the benefits of long-term returns by allowing them the option to reinvest any gains over a longer period. Those injecting cash into their pension last minute will not benefit from this.”
Salisbury House Wealth is based in Leicester. It offers professional advice to high net worth individuals on mortgage and pension plans, investment programmes, inheritance tax plans and life insurance.