40 is later, but far from too late
If you are starting a pension at 40, you have lost some of the compounding runway, but you still have over 20 years to retirement - plenty of time for equity growth to work. The catch is that you must save more each month to reach the same destination, and you cannot afford long gaps. The upside is that you are often earning more at 40 than at 30, so larger contributions are realistic.
What you could build from 40
| Monthly contribution | Pot at 65 (5% real) | Pot at 67 (5% real) |
|---|---|---|
| £300 | ~£130,000 | ~£145,000 |
| £500 | ~£215,000 | ~£240,000 |
| £750 | ~£325,000 | ~£360,000 |
| £1,000 | ~£430,000 | ~£480,000 |
Figures are in today's money at 5% real growth, including basic-rate tax relief. A 40-year-old paying £500 a month reaches a similar pot to a 30-year-old paying £250 - the cost of the ten-year delay is roughly double the monthly contribution.
How to catch up
- Consolidate old pots - most people at 40 have several small pensions from past jobs. Bringing them together cuts fees and makes them easier to grow.
- Use carry-forward - you can carry forward unused annual allowance from the previous three tax years, allowing large one-off contributions if you have the cash.
- Claim higher-rate relief - if you earn over £50,270, claim the extra 20% relief through self-assessment; many people miss this.
- Stay high-equity - 20+ years is still a long horizon, so a fund like Vanguard FTSE Global All Cap (0.23%) or LifeStrategy 100% remains appropriate.
Don't over-cautious it
A common mistake at 40 is feeling "behind" and switching to cautious funds for safety. With two decades to go, that usually does more harm than good - you need growth, not capital preservation. Keep equity exposure high and only begin adding bonds in your mid-50s.
Track down forgotten pensions first
By 40, many people have had four or five employers and may have lost sight of one or more pensions entirely. Before deciding how much new money to save, find what you already have. The government's free Pension Tracing Service can locate schemes from past jobs, and gathering recent statements gives you a true starting figure. People are frequently surprised to discover several thousand pounds sitting in old pots they had forgotten - money that, once consolidated and invested sensibly, immediately strengthens the foundation you are building on.
A realistic target by 40
A widely cited rule of thumb suggests having roughly twice your annual salary saved in pensions by 40. Many savers fall well short of this, and that is fine - it is a guide, not a verdict. What matters is the trajectory from here. If you are behind, the levers are clear: contribute more, capture full tax relief, keep costs low and stay invested in growth assets. A 40-year-old who commits to saving 20% of salary, including the employer contribution, from now on can still reach a comfortable retirement despite a late-ish start.
Verdict
At 40 the best move is a low-cost SIPP, old pots consolidated, invested in a high-equity global fund, with contributions of £500+ a month if you can manage it. The delay is recoverable with discipline. See how to bring pots together in best pension to consolidate into, maximise relief via best pension for higher-rate taxpayers, and project your catch-up with our pension calculator.