Well-off middle aged savers pile cash into Sipps during Covid crisis

Well off middle-aged savers pile cash into personal pensions during coronavirus crisis, but old and young put in about the same or less

  • Average value of contributions into Sipps by 30 to 39-year olds rose by 34.7%
  • Among 40 to 49-year olds, the increase was 18.3%
  • Interactive Investor’s research was based on its own Sipp users 
  • Their average pot size is around £232,000

Better-off thirty and fortysomethings have injected large extra sums into their personal pensions this year, new research shows.

Contribution levels are static among people in their 20s, and have dropped slightly among the over-55s, the new study of pension saving habits reveals.

The analysis of savings trends during a year when personal finances have been upended by the coronavirus pandemic was carried out by online investing platform Interactive Investor.

Covid crisis: Some people have kept their jobs and built up savings because they don’t spend as much during lockdowns

It probed how much its customers have put into their self-invested personal pensions or ‘Sipp’ accounts – which can be set up in addition to a work pension, or as an alternative if you don’t have an employer.

Users of Sipps receive pension tax relief from the Government but miss out on free cash from employers – they are particularly useful if you are self-employed. Read our guide to Sipps here. 

II’s research found:

– The average value of contributions into Sipps by 30 to 39-year olds between January and October this year rose by 34.7 per cent

– Among 40 to 49-year olds, the increase was 18.3 per cent

– The equivalent rise among 50 to 55-year olds was much smaller, at 6.8 per cent

– There was a fall of 0.3 per cent in the average contribution of those aged 18 to 29

– Among those aged between 56 and 65, the fall was bigger at 3.6 per cent.

More general surveys of the adult population have found many savers have stopped or cut back on paying into retirement funds during the Covid-19 crisis, with men and younger workers most likely to shun pension saving right now. 

II’s research was based on its own Sipp users and it didn’t reveal the number involved, although it has 350,000 customers overall.

But users of online investing platforms tend to be more affluent than typical workers enrolled in occupational pension schemes.

II confirmed that the average pot size of its Sipp customers is around £232,000. although there is a big gender gap between men with £261,000 and women with £149,000 on average.

Its middle-aged and relatively wealthy Sipp account holders may therefore be more more likely to have kept their jobs, and built up savings because they don’t spend as much during lockdowns.

Becky O’Connor, head of pensions and savings at II, says: ‘Our Sipp figures show a significant rise in contributions this year. 

‘This suggests that people in their 30s and 40s were being sensible with the money they were saving during lockdown and squirreling it away for the long term.

‘It’s positive to see these younger investors not afraid to up their investments and take advantage of lower stock prices after the initial crash. 

‘Older groups, from this data, appear to have been more cautious.’

II’s analysis of official Government spending data suggests households in the UK could save £748.70 during the next month-long lockdown

The biggest savings will be made from travelling less and not eating out, says II.

‘Before the first lockdown, average monthly transport costs per household were £347.50, according to Office for National Statistics data.

‘The average monthly spend on restaurants and hotels was £222.30; monthly spend on package holidays was £131.70 and £47.20 a month was spent on sports, leisure classes and cinema, theatre and museum visits.’

What should you do about your pension if you are strapped for cash?

Pension experts urge people to keep paying into pensions if they can afford it, to avoid harming their chances of a decent retirement.

Find out the three important rules to remember, and the options for what to do about different types of pension here. 

You can keep paying in to some types of pensions even if you have left your employer, and payments into pots based on 80% of salary are protected if you were furloughed. 

Read a 10-step guide to sorting out your pension here. We also have tips for people in their 20s wanting to get their pensions on track here, and help for older savers nearing retirement here. 


Leave a Comment