A significant majority of individuals are mistaken about the primary factor determining the value of their pension pots at retirement, a recent industry survey has revealed. The study by finance firm Standard Life found that three out of four people incorrectly believe personal or employer contributions are the main drivers of their retirement savings.

Instead, investment growth is responsible for approximately 65% of the typical pension pot's value, according to Standard Life's analysis of official figures. Individual contributions typically account for about 18%, employer contributions around 13%, and government tax relief about 4% of a standard £100,000 pension fund.

"Contributions are important, but the real benefit often comes from giving those contributions time to grow and generate returns over decades," said Jenny Holt, customer savings and investment director at Standard Life. "This is why starting early can make such a difference."

The survey of 6,000 adults aged 18 to 80 indicated that only one in four correctly identified investment growth as the most crucial element. While 25% of respondents recognized investment growth's importance, 39% attributed the most value to their own contributions, and 27% pointed to employer contributions.

Standard Life illustrated the impact of starting early with an example: a person starting work at age 22 with a £25,000 salary, making minimum auto-enrolment contributions (4% individual, 3% employer, 1% tax relief), could accumulate £210,000 by age 68. This projection assumes a 5% annual investment growth rate, 3.5% salary growth, 2% inflation, and 0.75% in fees. In contrast, delaying the start of savings until age 27 under the same conditions would result in a pot of £170,000 due to less time for investment growth to compound.

Compound growth, where investment returns are reinvested and subsequently earn their own returns, is described as a powerful force in pension saving, though its significance is underestimated by many. Holt emphasized that even modest contributions made earlier in one's career benefit from a longer period of potential compound growth.

For those concerned about their retirement savings, Standard Life advises reviewing existing pensions. Key information to seek from pension providers includes the current fund value, transfer value (to identify potential penalties), the type of scheme (defined contribution or defined benefit), any existing guarantees, and projected retirement income. Savers are also encouraged to use online pension calculators and add state pension forecasts to their own projections.

The firm also suggests exploring options for increasing contributions, especially if employers offer matching contributions or if one receives bonuses and pay rises. Individuals who have lost track of old pension pots can utilize the government's free pension tracing service, cautioning against unofficial services that may charge fees or be fraudulent.