Starting a Pension at 55: Your Complete Guide
Starting a pension at 55 requires higher contributions but is very much worthwhile. Every year of saving adds to your retirement security, and tax relief makes your contributions immediately more valuable.
How Much Should You Save at 55?
A common guideline is to save half your age as a percentage of salary. At 55, that means saving 28% of your income into a pension. For the auto-enrolment minimum of 8% (5% employee, 3% employer), this may not be enough for a comfortable retirement.
Which Pension Should You Choose?
If you are employed, your workplace pension is the obvious starting point — your employer must contribute at least 3%. If self-employed, consider a SIPP for maximum investment flexibility or a personal pension for simplicity.
Tax Relief at 55
Every pension contribution receives tax relief. As a basic rate taxpayer, a £100 contribution only costs you £80. Higher rate taxpayers save even more — £100 costs just £60. This instant return makes pensions one of the most tax-efficient savings vehicles available.
Common Mistakes When Starting at 55
- Only contributing the auto-enrolment minimum and assuming it is enough
- Staying in the default fund without checking if it suits your risk profile and timeline
- Not increasing contributions when you get pay rises
- Ignoring employer matching — some employers match contributions above the minimum
- Cashing in old pensions from previous jobs rather than consolidating them