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Early start would pay off

Employees delaying pension saving until personal accounts come into force in 2012 could reduce their final pension pot by £175,000, warns Fidelity International.

Analysis by the firm has found that an employee aged 25 who contributes £300 a month from now to 65 could amass £901,000. If they waited until 2012 to start making pension contributions, their final pot would be £726,000.

Even if the employee only started contributing £100 a month from now until 65, their pension pot could be £300,000 compared with £242,000 if they delayed contributions until 2012.

Head of UK defined-contribution pensions Julian Webb says: “Starting early simply gives people the opportunity to build a bigger pot by retirement. It also puts people in a better position to recover from falls in stock markets and interest rates. I’d suggest anyone with access to a company pension scheme but who decided not to join should reconsider that decision now.”

P3 wealth management managing director Frank O’Donnell says: “There is no reason why anybody should hold back contributing to a pension scheme until 2012. Employees cannot afford not to start saving early.”

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