How to build a million-pound pension – 6 top tips

Market volatility, soaring inflation and rising interest rates aren’t exactly the ingredients you’d pick to cook up a healthy retirement pot.

But even with the financial uncertainty of recent years, thousands of investors are staying the course, growing their pensions, and building towards seven-figure savings goals.

Yes, a million-pound pension is still within reach.

There are currently over 4740 HL Self-Invested Personal Pension (SIPP) millionaires, and most of their success isn’t down to luck or perfect market timing.

It’s down to disciplined saving, smart choices, and playing the long game.

And that’s good news for all of us.

Because while markets and investments rise and fall, the principles behind building long-term wealth remain solid.

In this article, we’ll look at how to build a strategy that stands up to uncertainty and ultimately puts you in charge of your financial future.

As ever, this isn’t personal advice. If you’re not sure what’s right for your situation you should consider contacting a financial adviser – book a call with our advice service team today to see if we can help.

If there’s one rule that underpins nearly every SIPP millionaire story, it’s the earlier you start, the more time your money has to grow.

That’s thanks to the power of compounding.

Your returns generate their own returns over time. It might not feel dramatic in the early years, but over decades it can have a huge impact.

Let’s take two hypothetical savers as an example:

• Emma starts saving £300 a month into her pension at age 25.

• James starts saving the same amount but waits until he’s 35.

Assuming Emma and James increase their contributions by 3% each year and achieve an average annual return of 5% after charges, by the time they both reach age 68:

• Emma’s pension pot could be worth over £840,000.

• James’s pot could total over £430,000 – about half as much, despite only starting 10 years later.

These figures don’t take into account inflation.

The key takeaway? Even small contributions can grow significantly when you start early.

One of the most overlooked, yet important steps to building a robust pension is consolidation.

Many of us have pensions scattered across previous employers, older schemes, or default funds we’ve long forgotten. Over time, this can lead to:

• Higher costs

• Overlapping or underperforming investments

• Lack of visibility and control

By bringing your pensions together into one plan, like the HL Self-Invested Personal Pension (SIPP), you can simplify your retirement planning.

You’ll be able to keep a closer eye on your investments, keep charges in check, and build a coherent strategy across your entire retirement pot.

It’s easy to consolidate with HL. The quickest way to get started is online. We’ll keep you updated along the way and let you know once your transfer is complete.

Before transferring, check for exit fees and any potential loss of benefits – such as guaranteed annuity rates or protected tax-free cash.

• If your salary is £40,000 and your employer offers to match contributions up to 5%, but you’re only paying in 3% (£1,200 per year), you’re missing out on an additional £800 from your employer.

• By increasing your contributions from 3% to 5% (£2,000 per year), you could boost the total yearly pension contributions from £2,400 to £4,000 (your £2,000 plus your employer’s £2,000).

Speak to your HR or payroll team to find out what your employer offers and make sure you’re getting the full benefit.

Over time, those additional contributions can make a significant difference, especially when combined with your own payments and potential investment growth.

Remember, pension savings are typically accessible from age 55 (rising to 57 in 2028).

To build a large pension, it's important to understand the tax-efficient limits.

Most people can contribute up to £60,000 a year into pensions and still receive tax relief (though high earners and those who’ve already accessed their pensions might have lower limits).

Crucially, you can also carry forward unused allowance from the previous three tax years, provided you were a member of a UK-registered pension scheme during that time.

This can be an excellent way to make larger, one-off contributions, particularly for those nearing retirement or coming into an inheritance or bonus.

Remember, pension contributions count toward your annual earnings, so you can’t personally contribute more than you earn in a year and receive tax relief.

It’s also important to review your investments regularly. Even just once a year can make a big difference. Ask yourself:

• Are my investments still aligned with my goals?

• Could my pension benefit from rebalancing?

• Has my risk appetite changed?

By checking in regularly, rather than ignoring your pension, you can course-correct early – before small issues turn into big problems.

Remember all investments can fall as well as rise in value, so it’s possible to get back less than you invest.