• £65,000 of a typical £100,000 pension pot comes from compound investment growth over time, compared to £18,000 in individual contributions 
  • Yet only one in four (25%) people believe investment growth is the main driver of the final value of their pension pot, compared with two fifths (39%) who believe individual contributions make the biggest difference
  • This comes as one in five (21%) admit they consider retirement planning as something to worry about later


Nearly two-thirds of the value of a typical pension pot comes from investment growth, but three quarters (75%) of people don’t realise it, according to new research1 from the retirement specialist Standard Life.

Standard Life analysis of government figures² highlights that, while contributions from individuals and employers form the vital foundation of pension saving, investment growth can play an even greater role over the long term. For a typical defined contribution pension pot of £100,000, around two thirds of the total value (65% / £65,000) comes from compound investment growth. Individual contributions account for £18,000, employer contributions make up £13,000, and tax relief adds £4,000.

Despite investment growth playing such a valuable role in terms of pension pot growth, many people are unaware of its significance in dictating the final pot. Only one in four (25%) people believe investment growth is the main driver of the final value of their pension pot. Instead, two fifths (39%) believe their individual contributions make the biggest difference, while a quarter (27%) point to employer contributions, and almost one in ten (8%) identify tax relief as the main driver.

 

  The overall value of a pension pot (based on a £100k pot) 
Tax relief from Government 4% (£4,000)
Employer contributions 13% (£13,000)
Individual contributions 18% (£18,000)
Compound investment growth over time 65% (£65,000)

A pension is a long-term investment. Its value can go up as well as down and could be worth less than was paid in.

Time could be your pensions biggest advantage

This misunderstanding comes as many people are delaying retirement planning altogether. Just 15% say they actively prioritise saving into their pension, while one in five (21%) admit they see retirement planning as something to worry about later. This rises to more than a third (35%) among Gen Z, despite younger savers potentially having the most to gain from giving their pension longer to grow.

Someone who starts working on a salary of £25,000 and pays minimum monthly auto-enrolment contributions (5% employee, 3% employer) from age 22 could build a total retirement fund of £210,000 by age 68, adjusted for inflation2. Waiting just five years until age 27 to start contributing could result in a total pot of £170,000, £40,000 less, with the money having less time to realise compound investment growth.

 

Total retirement fund at age of 68*
Started saving for retirement at 22 years old Started saving for retirement at 27 years old  Started saving for retirement at 32 years old  Started saving for retirement at 37 years old  Started saving for retirement at 42 years old 
£210,000 £170,000 £136,000 £107,000 £82,300
  -£40,000 -£74,000 -£103,000 -£127,700

*assuming 3.50% salary growth per year, and 5% a year investment growth. Figures account for 2% inflation. Annual Management cost of 0.75%.

Jenny Holt

Compound investment growth can be one of the most powerful forces in pension saving, but our research suggests many people underestimate the role it plays. Contributions are important, but the real benefit often comes from giving those contributions time to grow and generate returns over decades.

This is why starting early can make such a difference. Even modest contributions made earlier in your working life have longer to benefit from potential compound investment growth, while delaying saving can mean missing out on the years when your money could have been working harder for you.

Of course, people need to balance pension saving with day-to-day costs and shorter-term goals, especially in the current high cost of living environment, but where finances allow, engaging with your pension early, checking what is going in, and making the most of any employer contributions available can help give investment growth the best chance to boost your retirement savings over time.

- Customer Savings & Investment Director

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Notes to editors:

1Retirement Voice 2025 - Research conducted by Ipsos on behalf of Standard Life in June 2025. In total 6000 participants took part in the online survey. Participants were aged 18-80 and were a mix of working, unemployed and retired people. Quotas and weights were used to ensure the respondents were representative of the UK general population on age, gender and region.

2Pension fund investment and the UK economy - GOV.UK

3Calculations assume the following:

Starting Salary £25,000
Employer Contribution    3.00% Employer Contribution    3.00%
Employee Contribution    5.00% Employee Contribution    5.00%
Investment Growth    5.00% Investment Growth    5.00%
Salary Growth    3.50% Salary Growth    3.50%
Inflation    2.00% Inflation    2.00%
Annual Investment Cost    0.75% Annual Investment Cost    0.75%

Calculations are intended only for the sole purpose of providing an illustration regarding the projection of savings and pensions. They should not be used with the intention to give an accurate representation of real-world outcomes.
 

About Standard Life

Standard Life is a retirement specialist focused entirely on retirement saving and income. We are proud to manage around c£317bn in assets on behalf of our 12 million customers, and we champion the belief that everyone's journey to and through retirement can be better.  

With our focus entirely on retirement savings and income we want to be the business that people trust to guide their retirement journey, helping our customers achieve better outcomes and greater financial security in later life. 

As a FTSE 100-listed group we are using our size, expertise and influence to shape the world our customers will retire into, and are committed to helping three million more customers by 2035, take action towards a better retirement.  

Standard Life is a responsible investor with a clear commitment to supporting a more sustainable future. The Group has achieved its net zero goal across its emissions for 2025 and is working towards net zero investment portfolios by 2050 or sooner.

Standard Life is recognised as a leading employer, with long-standing accreditation as a Living Wage Employer, Living Pension Employer and Carer Positive Exemplary Employer and in 2025 became one of Britain’s Most Admired Companies in 2025.