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Due to its generous tax relief and flexibility around the types of investments that can be held, a Self-Invested Personal Pension (SIPP) is a great way of saving for old age. However, it’s clear that not enough of us are saving sufficiently to provide for a comfortable retirement.
Indeed, according to the Wealth & Assets Survey by the Office for National Statistics, the average pension pot for a 47 year-old is £27,000, excluding those with defined benefit schemes. Fortunately, it’s not too late to make amends.
According to Legal & General, there’s still a “window of opportunity” for those in their 40s and 50s to change their retirement prospects. And this includes those that haven’t started saving yet. Let’s take a closer look and see what’s possible.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Don’t give up
Although Legal & General’s research into retirement planning reveals that 9m people aged 25 to 54 are “not currently on track for an adequate retirement”, there’s no need to panic.
The group claims that a 47-year-old, starting with nothing, could build a savings pot of £116,000 over two decades. This assumes a contribution of 8% of the UK’s average salary and a real (post-inflation) annual investment growth rate of 4.1%. As an added bonus, after 20 years, this person would be entitled to receive the State Pension.
In cash terms, what does this mean?
Of course, it’s impossible to see into the future but, at the moment, someone with a full record of National Insurance contributions is entitled to a State Pension of £11,973 a year. And a person holding a £116,000 SIPP of dividend shares yielding 6% could earn a further £6,960. Overall, this would give an annual income of £18,933. Not bad for someone who only started saving seriously in their late 40s.
Conservative assumptions
If more people take control of their retirement planning, then FTSE 250 wealth manager AJ Bell (LSE:AJB) could be one of the beneficiaries. Although the group sold its pensions business a year ago, it still offers its clients access to SIPPs.
Since listing in December 2018, the group’s share price has risen 197%. This is equivalent to over 16% a year, which suggests Legal & General’s assumption of a 4.1% growth rate is on the cautious side. It’s also yielding 3% at the moment, although there can be no guarantees when it comes to dividends.
Some of AJ Bell’s success is due to the fact that it’s operating in an industry with high barriers to entry. New entrants are unlikely to be in a position to quickly achieve the scale necessary to be profitable. And it’s expensive building a robust investment platform.
But there are risks. Income from its fee-generating advice could be affected by cheaper AI-powered alternatives. And the group operates in a tightly regulated market where the fines can be significant for any transgressions.
However, for the time being at least, the group’s successfully meeting these challenges.
In 2025, customer numbers in its platform business increased by 21% to 673,000. Assets under administration went up by 21% to £108bn. And given recent turbulence in global stock markets — likely to have resulted in increased buying and selling — I reckon it will have had a strong start to 2026.
Whether as part of a SIPP or not, I think AJ Bell’s a stock to consider.