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Delays can halve pension

University graduates risk cutting their pension funds in half by delaying contributions until they are 30, warns HSBC.

Almost half of young people believe they are too young to prioritise their pension, with 48 per cent of 16-24-year-olds ignoring the need for a pension.

Research by NOP in February for HSBC questioned 981 adults aged over 16, finding 17 per cent of 16-24-year-olds and 43 per cent of 25-34-year-olds are paying into a pension.

Once into their 30s, people seem to take pensions more seriously, although there are still around half of adults not contributing to any kind of pension scheme.

Fifty-five per cent of 35-44-year-olds and 49 per cent of 45-54-year-olds were not making any pension contribution.

A 21-year old paying 75 a month into a stakeholder pension could reach a retirement fund of 338,000 that would buy a pension of 23,400 a year at current annuity rates but HSBC says the same person delaying until 23 could lose 14 per cent of that fund.

Delaying until they are 30 would mean the saver retiring with a fund of 172,000 or 11,900 a year – 49 per cent less than if they had started contributing immediately after graduation.

HSBC senior manager, pensions Ian Martin says: “Retirement seems a long way off when you first start work, especially for graduates who are more likely to be more concerned with repaying their student loans. But as the statistics show, starting retirement contributions early makes a huge difference later on.”

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