The UK’s biggest pension pot is worth £11 million, new data has revealed.
A Freedom of Information request by wealth manager RBC Brewin Dolphin found one UK saver had amassed £11 million in retirement savings, while some 929,000 savers have built up pensions worth between £1-2 million.
A further 128,000 are sitting on pension pots totalling between £2-3 million, while 46,000 investors have built pots worth over £3 million.
According to the Office for National Statistics, savers need to have pension wealth of £374,500 to be among the top 10% of retirement savers, with the median figure standing at £637,500.
While the circumstances of the £11 million pension holder are unknown, RBC Brewin Dolphin said they could expect to enjoy an annual income of £540,000 over a 30-year retirement period and never have to worry about running out of savings.
Rob Burgeman, investment manager at RBC Brewin Dolphin, pointed to the effect of compounding in helping to build larger pension pots. Factoring in tax relief, a £100-a-month plan (costing £80 per month), will bring in total contributions of £9,600 after ten years. But as the pot grows compounding could see the pension pot grow to £15,592, assuming 5% annualised returns after fees.
Burgeman said over 20 years, the same plan could see contributions of £19,200 more than double to £41,274. A further 10 years could see £28,800 become £83,572, while 40 years of contributions of £38,400 could reach as much as £153,237.
Burgeman continued: “These days thanks to employer contributions and auto-enrolment, it’s possible for people even on modest incomes to reach millionaires’ row by the time they retire.
“The government recently announced it would be supporting a private members bill which would reduce the age of auto-enrolment from 22 to 18. Someone entering the workforce today aged 18 and paying £389-a-month into their pension could reasonably expect to retire with a £1million pot aged 68 assuming annualised returns of 5% after fees.”
In the first decade, the investor’s pot could grow to £60,181 based on investments of £46,680. Ten years later their nest-egg could have more than doubled in size to £158,210 based on contributions of £93,360 and after 30 years, they could have accumulated £317,889 on investments of £140,040. By the time they’ve clocked up 40 years in the workforce, they could be in possession of a retirement fund worth £577,990 based on contributions of just £186,720, said RBC Brewin Dolphin.
“But it’s in the last decade before retirement that the millionaire jackpot finally becomes a reality. After 50 years, the pot could well have smashed through the seven-figure mark on contributions of just £233,400. The figures leave little doubt that compounding can be like rocket fuel for your pension. And if you don’t live to spend it all, you can usually pass it on to the next generation without losing anything in inheritance,” Burgeman added.
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