One saver has built a £11m pension – and 46,000 people have retirement pots of more than £3m

A pension saver has built a whopping £11million retirement pot, a Freedom of Information request to the Office for National Statistics has found.

Additionally, 46,000 investors have pension pots with more than £3million, while 128,000 have nest eggs worth £2million to £3million.

The £11million mega pot works out to a possible annual income of £540,000 or £10,600 per week for the individual whose identity is not known, according to analysis by RBC Brewin Dolphin.

The average pensioner currently has a retirement income of £349 per week, or less than 4 per cent of what the mystery saver has built.

Unlocking retirement: More than 1m savers have a pension pot worth more than £1m, according to the FOI

Rob Burgeman, an investment manager at RBC Brewin Dolphin, says the ‘incredible’ pot is a lesson in good pension planning that ‘everyone should undertake regardless of income.’

To make it up to the £11 million pot, RBC Brewin Dolphin estimates an 18-year-old would have to put in £49,260 per year until they are 68.

Burgeman adds: ‘Quite how this individual built up an incredible £11million pension we will never know.’

‘These days thanks to employer contributions and auto-enrolment, it’s possible for people even on modest incomes to reach millionaires’ row by the time they retire.’

The ONS data, obtained by a FOI request from RBC Brewin Dolphin, also shows that roughly 1.1 million pension savers have a pot worth more than £1million.

To be in the top 10 per cent of private pension pots, the ONS data shows you need £374,000 or more saved.

The data shows 66 per cent of savers in the top 10 per cent of pension wealth are men, while the bottom 50 per cent of savers hold only 1 per cent of pension wealth.

But Burgeman urged hope, stating there is a possibility that even those on ‘modest incomes’ could reach £1million or more in savings.

‘Someone entering the workforce today aged 18 and paying £389-a-month could reasonably expect to retire with a £1million pot aged 68 assuming annualised returns of 5 per cent after fees.’

He says the key to getting to these lofty sums could be employer contributions and auto-enrolment into pension plans.

He adds: ‘Building a war chest for retirement can seem extremely daunting at first, but money saved regularly over long periods can produce quite dramatic results, as the ONS data demonstrates.

‘Whatever your income, there are a couple of powerful weapons to be aware of in your armoury when planning for retirement.

‘Making use of tax reliefs is crucial: a basic rate taxpayer saving £80 of take-home pay into a pension gets a £20 top-up from HMRC, making a total investment of £100 — or an instant return of 20 per cent. 

‘As Paul Daniels used to say, “that’s magic”.’

‘Then there’s the mathematical phenomenon of compounding, or interest on your interest. 

‘Factoring in tax relief, a £100-a-month plan would only actually cost an investor £80 per month, bringing total contributions to £9,600 after ten years.

‘But as your pot grows you are gaining interest on your increased amount, meaning your pension wealth could balloon to £15,592, assuming 5 per cent annualised returns after fees.

‘The miracle only becomes greater over longer time horizons. Over 20 years, the same plan could see contributions of £19,200 more than double to £41,274. Another decade still and £28,800 could become £83,572. After 40 years, contributions of £38,400 could soar to £153,237.

‘There’s no question that the magic of compounding mixed with some sound tax advice makes for an extremely potent cocktail.’

Government targets pension reform

In March, the Government backed a bill that would lower the auto-enrolment age on pensions to 18 rather than 22, meaning workers will potentially start building their retirement pot from an earlier age – this could help create a bigger private pension in later life.

Jeremy Hunt also announced in March that the Government would scrap the lifetime allowance, meaning there would be no limit total that someone can save in their pension without a tax charge.

If you want to keep more of your pension money without it being taxed, read our guide: Eight tips from the experts on keeping your retirement fund out of the clutches of the taxman.

This post first appeared on Dailymail.co.uk