Kate Smith, Head of Pensions at Aegon, says: “Three years into automatic enrolment, millions of workers have been auto-enrolled into a workplace pension scheme and started saving for their retirement. But around 10% of workers actively opted out of pension saving and have lost out on both their employer’s pension contribution and a government top-up.
Someone on average earnings of £27,000 a year will have lost a minimum of £635 in employer contributions and £127 in tax top-up from the Government. Effectively workers have ‘saved’ themselves £508 in pension contributions but have lost out on a total of £1,270 in their pension, taking a pay cut.
Some employers will be offering to pay more than the automatic enrolment minimum. Anyone opting out of such a scheme could have lost thousands of pounds.
Everyone wants to give up work at some point and have a decent standard of living in retirement. Saving through a workplace pension is the best way of doing this and the sooner you start the better. Nowhere else will you benefit from both an employer contribution and a government top-up. Three years on, as the largest employers are starting to re-enrol their workers, we hope those who opted out first time round will have a rethink.
And with employers’ contributions set to begin to rise in 2018, workers who opt-out again will be set to lose out even more.”
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