Brits could boost retirement savings by £32,970 by paying themselves a Christmas contribution pension bonus

Brits could boost their pension by thousands of pounds by retirement if they opt to give themselves an annual Christmas contribution bonus, according to new analysis by PensionBee.

According to Statista, average spending per head during the 2024 Christmas period is expected to reach £796 across the UK, with a low of £698 in the North East and a high of £977 in London.

If Brits were to redirect just a quarter (£200) of this predicted spending into their pension instead by way of an additional contribution, they could add between £305 and £521 to their pension pot, depending on how far off they are from retirement. By saving half of the forecast amount (£400), they could boost their pension pot by between £608 and £1,0 ahead of retirement.

Crucially, if Brits consistently made similar additional contributions each Christmas, a 25-year-old today could accumulate an extra £16,483 by retirement with a £200 annual Christmas contribution pension bonus, or an impressive £32,970 with larger contributions of £400 each year. For those closer to retirement, an annual contribution of £200 could raise an extra £3,528 towards their retirement fund, rising to £7,056 if they are willing to sacrifice more of the Christmas trimmings.

Becky O’Connor, Director of Public Affairs at PensionBee, commented: “With Christmas just around the corner, it’s a great time for savers to reflect on their festive spending habits and consider whether some of that money could be redirected into their pension.

Even contributing a small amount can see savers benefit hugely from the power of compounding interest and tax incentives from the government, significantly boosting retirement savings over time. Adding a lump-sum “Christmas contribution bonus” into your pension is straightforward, and your future self will thank you for it.”

Table 1: Projected pension pot based on saving 1/4 of average Christmas spending in 2024

Source: PensionBee, November 2024. The savings figure has been rounded up from £198 to £200. We included the incremental ^{_corporation_tax} tax top up from HMRC and assumed 5% investment growth, inflation of 2.5% per year and one annual management fee of 0.7% taken from the pension each year.

Table 2: Projected pension pot based on saving 1/2 of average Christmas spending in 2024

Source: PensionBee, November 2024. The savings figure has been rounded up from £198 to £200. We included the incremental ^{_corporation_tax} tax top up from HMRC and assumed 5% investment growth, inflation of 2.5% per year and one annual management fee of 0.7% taken from the pension each year.

Table 3: Projected pension pot based on saving 1/4 of average Christmas spending every year until age ^{_state_pension_age}

Source: PensionBee, November 2024. The savings figure has been rounded up from £198 to £200. We included the incremental ^{_corporation_tax} tax top up from HMRC and assumed 5% investment growth, inflation of 2.5% per year and one annual management fee of 0.7% taken from the pension each year.

Table 4: Projected pension pot based on saving 1/2 of average Christmas spending every year until age ^{_state_pension_age}

Source: PensionBee, November 2024. The savings figure has been rounded up from £198 to £200. We included the incremental ^{_corporation_tax} tax top up from HMRC and assumed 5% investment growth, inflation of 2.5% per year and one annual management fee of 0.7% taken from the pension each year.

Footnotes

1. Statista