More than 1 in 4 employees over the age of 55 are missing the chance to double their retirement savings, according to substantial research from a workplace pension provider.
NOW: Pensions surveyed 86,291 of its members and found 22% of over-55s opted out of their workplace pension, compared to just 8% of under-55s and 7% of those aged 20 to 40.
Therefore, over-55s are 3 times more likely to opt out of auto-enrolment than their younger counterparts.
Adrian Boulting, policy director at NOW: Pensions, suggests those who opt out of auto-enrolment are missing out on employers matching their contribution as well as tax relief from the government.
He also suggested people who do this may think they have saved enough for their retirement.
Boulting said: “People who do this are effectively throwing money away by missing out on their employer’s contribution to their pension, and the government’s contribution in the form of tax relief. While some people are near the lifetime limit, if you are not in that situation then it just doesn’t make sense to opt out – especially at older ages.”
To date, more than 7.6 million workers are saving for their retirement through a workplace pension.
The population growing and increasing life expectancies mean that having enough income for retirement is more important than ever in securing the financial life you want.
The minimum total contribution towards a workplace pension is based on your qualifying earnings. This is set at a legal minimum for the amount that both you (employee) and your employer must pay into the workplace pension scheme each month.
The rates will rise from April 2018.
|Date||Minimum employee contribution||Minimum employer contribution|
|Before April 2018||1%||1%|
|April 2018 – April 2019||3%||2%|
|After April 2019||5%||3%|
It is possible to save more than the minimum contributions, while your employer may also choose to contribute more than 1%.
Some of the alternative options available, either as an alternative to auto-enrolment or to supplement contributions, include:
- personal pensions