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&#39Modest top-up can boost pension&#39

An extra one-off pension contribution of £1,000 could substantially increase the number of people expecting an income in retirement of 50 per cent or more of their final salary, according to JP Morgan Fleming Asset Management.

Research from the fund manager indicates that modest additional pension savings can improve retirement prospects for today&#39s workers.

It says the percentage of working men who can reasonably expect a pension of half their current salary is only 29 per cent. But with an additional £1,000 contribution, this jumps to 46 per cent.

The situation is similar for women. The fund manager says the 30 per cent of women currently expecting a pension of half their salary could be boosted to 46 per cent by an extra £1,000 contribution.

Not surprisingly, the survey shows that young people stand to gain the most. Only 27 per cent of working men aged 20 to 29 can currently look forward to a pension of half their salary but this figure would almost double to 53 per cent if each added a further £1,000 to their pension arrangement.

For young women in the same age group, contributing an extra £1,000 to their pension would increase the number to 50 per cent from 33 per cent.

Investment trust client director Simon Crinage says: “At a time when the outlook for pensions looks so gloomy, it is heartening to see research which suggests that individuals can make a positive impact on their retirement prospects.

“Even a contribution of just £1,000 can make a big difference to the pension income you can expect to receive and, the younger you are, the more impact it will have because the longer it has to grow and benefit from the effects of compounding, that is, the reinvestment of dividends.”

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