Would you really turn down £1,500 of free money? A lot of people reaching retirement age are apparently doing exactly that.
According to new figures published by Nest, the state-backed workplace pension, £140 million is being turned down by older workers before retirement.
Since the introduction and roll-out of the new workplace pension schemes – where employees are automatically-enrolled and obliged to pay into a pension pot, with their employer paying in also – an extra 4.5 million people are contributing to their retirement fund. Providing you are over 22 years of age and earning at least £10,000 per annum, you will be automatically enrolled by February 2018, depending on the size of the company you work for. Of course, there is always the option to opt-out.
While only 5% of those under the age of 30 are opting out, more than a quarter of employees over 60 (28%) are rejecting their company’s scheme: ultimately meaning they are missing out on free money.
By opting out of workplace pensions, over 60s are losing around £1,500 each from their retirement fund. Staying enrolled allows you to get extra money from your employer and tax relief, sometimes even doubling your own contribution.
With this year’s announced pension reforms coming into play in April 2015, auto-enrolment is even more of an attractive proposition, allowing more flexibility and access to the extra money you’ll build up.
There are a number of resources online to help you get a better understanding of how to handle your pension. My Pension Choices is a great place to start, particularly when it comes to comparing and choosing which pension option is right for you, and understanding what effect the 2014 pension reforms will have on your retirement.
If you want to work out your contributions to your workplace pension and see just how much more you could be investing into your retirement fund, Money Advice Service has developed an easy to use ‘Contributions Calculator’.
For the official word on the workplace pensions scheme, you can find all the details over at Gov.uk/workplace-pensions
If you have any more questions, My Pension Choices can also put you in touch with an financial advisor, giving you the chance to get the best advice out there, and answer any questions you may have. Fill in their simple form and you’ll be put in touch with a local advisor as soon as they’re available.