Pension contributions are not considered among the top three financial priorities until individuals reach their fifties, specifically up to the age of 59, after which their importance begins to decline again, research from Standard Life has revealed.

The research, which examined how Standard Life customer’s financial priorities shift as they move through life, found that for those aged between 18-34 saving for a home was a top priority, aligning with the fact that the average age of first-time buyers is 34.

Meanwhile, for those in their teens and twenties saving for holidays was an important consideration. 

In addition to this, as savers move later into life and have more responsibilities like mortgages, people aged 35 and 39 prioritise paying off debt and remain a top three priority until the age of 54.

For those aged between 35 and 50, the cost of supporting children and family as well as day-to-day living costs was also found to be a top financial consideration.  

Standard Life suggested that due to the introduction of auto-enrolment (AE), most young savers have time to build up retirement savings without pensions ranking highly on their financial priorities.

However, the provider emphasised that the current minimum AE contributions of 8 per cent of salary (5 per cent for employee, 3 per cent for employer) are unlikely to provide a “decent” standard of living in retirement for most.

In addition to this, it also warned that there was a danger that savers in their 40s who rank pension saving low on their list of financial priorities could be caught in the gap between the decline of defined benefit (DB) pensions and defined contribution pensions.

Standard Life’s Retirement Voice survey found that Baby Boomers and older, those over 60, were almost twice as likely (39 per cent) to have a DB scheme than Gen X, those between 44 and 59 (22 per cent).

Meanwhile, the majority (54 per cent) of Gen X are worried their finances will not cover their retirement, compared to 31 per cent of Baby Boomers.

However, Standard Life suggested that people in this age group were likely to be towards the top end of their earning potential.

Standard Life retirement savings director, Mike Ambery, said: “It’s not unusual for pensions to take a backseat to more immediate financial priorities until later in life.”

He added that this was not necessarily a problem, so long as savers kept an eye on their pensions and made conscious decisions about retirement when necessary.

“In an ideal world, starting early and increasing contributions gradually in line with any pay rises or financial boosts like bonuses can make a huge difference to your eventual pot and resulting retirement income,” Ambery added.

However, he stated that it was never too late for savers to increase their contributions, with calculations showing that someone who chose to increase their pension contributions by 3 per cent to a total of 11 per cent (8 per cent employee, 3 per cent employer) from the age of 45 could build up a pot £32,000 larger than someone who contributed the minimum level through their career, in today’s prices.

This research also found that someone with no pension savings until the age of 45 could build up a similar pot to someone who had contributed at a minimum level throughout their career by contributing 18 per cent of their salary from 45 until retirement.

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