One-off pension contributions of £1,000 every five years could boost retirement savings by up to £23,000 by the time the saver reaches retirement, Standard Life has found.

The savings firm has said that making ad-hoc payments into a pension throughout a career can go a long way towards building a healthy pot in retirement, with smaller contributions even making a difference after they’ve had the chance to benefit from compound investment growth.

Standard Life’s analysis, which is part of this year’s pension engagement season, found that those who begin working on a salary of £25,000 per year and pay the minimum monthly auto-enrolment contributions of 3% employee, 5% employer from the age of 22, could have a total retirement fund of £434,000 by the age of 66, not adjusted for inflation.

However, for those who add nine one-off payments of £500 every five years from the age of 25 to 65 could find themselves £11,000 better off in retirement.

Furthermore, for those in a position to contribute more, for example £5,000 every five years between the ages of 25 to 65, could see a total pot of £549,000, £115,000 more than if no additional contributions were made.

Managing director for workplace at Standard Life, Gail Izat, said: “When you come into a bit of extra money, whether it be a bonus, a gift or something else, it’s always tempting to spend it as soon as possible. Right now, lots of people will be using it just to get back on track with monthly bills. However, if you are in a position to do so, topping up your pension can be one of the best ways to look after your future self. Pensions are tax-efficient and have the potential to beat inflation and the interest on cash-based savings, so a small top-up now can lead to a big boost in the future.

“Particularly when times are tough, it’s normal to prioritise the short-term over the long-term. Employers and pension providers have a big role to play in conveying the benefits of looking to the future, if at all possible – crucially, showing how pensions are part of a bigger financial picture through targeted communications, as well as giving people the option of seeing all their finances in one place through tools like open finance, can help people stay engaged throughout their lives.”

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