An average earner who opted out of auto-enrolment back in 2012 will have increased their gross pay by £508 but lost out on £862 in employer contributions and tax relief, according to figures from Aegon.
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, says the provider, urging the 10 per cent of workers who opted out not to do so on re-enrolment.
Aegon head of pensions Kate Smith 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 per cent of workers actively opted out of pension saving and have lost out on both their employer’s pension contribution and a government top-up.
“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.”
