Having no pension savings at 50 isn’t an ideal start to retirement planning. But if you’re in this situation, the good news is it’s not the end of the world. And there’s still plenty of time to start a building half-million-pound pension pot for a cosier retirement. Here’s how.
Getting started
First things first, you need to use the right tool for the job. And when it comes to growing a pension, the Self-Invested Personal Pension (SIPP) is arguably one of the most powerful options out there.
Apart from enabling a portfolio to grow without interruption from capital gains or dividend taxes, any contributions made also receive some juicy tax relief. That essentially means someone paying the basic rate of income tax receives a 20% tax refund, turning a £1,000 deposit into £1,250 of investable capital.
So how much money could an investor end up with by retirement?
Let’s say a 50-year-old is starting from scratch today and wants to retire at 67. Compounding £1,250 a month at the stock market’s 8% average return for 17 years will grow a brand-new SIPP portfolio to £539,746.55.
But with inflation slowly chipping away at purchasing power, half a million might not be enough 17 years from now. So what’s the solution?
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.
Aiming higher
Instead of aiming to replicate the stock market’s average 8% return, investors can craft a custom portfolio of top-notch stocks to beat the market. And the results can be game-changing.
A perfect example of this over the last 17 years is PPHE Hotel Group (LSE:PPH). The company’s a bit of a rare oddity within the hospitality real estate sector, choosing to continue owning and building new properties while most of its rivals shifted to more asset-light models.
When combining this real estate investor strategy with its ‘buy, build, operate’ strategy, PPHE enjoyed the best of both worlds, generating cash flows from its portfolio of hotels while simultaneously benefiting from steadily rising property prices.
The result? A 5,291% total return since April 2009 – the equivalent of a 26.4% annualised return. And anyone who’s been drip feeding £1,250 each month at this rate now has borderline generational wealth of £4,756,782.67.
Still worth considering?
In 2026, PPHE continues to demonstrate steady momentum. Its 2025 revenue grew by 5.3% to a record £466.4m while the all-important revenue per available room (RevPAR) improved 2.6% to £123.40.
With newly-opened hotels expected to generate more incremental earnings, institutional analysts at Jefferies have taken notice, issuing a 2,000p share price target just last month – around 24% higher than where the stock’s trading today.
Of course, this forecast isn’t without risk. PPHE continues to operate with a debt-heavy business model. In fact, the balance sheet currently holds just shy of £1.2bn in debts & equivalents compared to the group’s market-cap of only £673m.
Given the cyclical nature of the hospitality sector, this operating leverage could turn from a tailwind into a headwind very suddenly – a risk that investors need to consider carefully.
Nevertheless, management’s track record of navigating storms, even with a highly leveraged balance sheet, is fairly remarkable. And if the firm continues on its current path, some more impressive long-term gains could emerge for investors aiming to build up a chunky pension pot.
