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Three million workers are missing out on £650 a year in pensions savings - how to get it back

Mirror logo Mirror 6 days ago Tricia Phillips
© Provided by Trinity Mirror Shared Services Limited

More than three million workers are missing out on a £2billion boost to their pension savings - equating to £650 each per year.

Automatic enrollment into workplace pensions has a legal minimum contribution from both workers and bosses - currently 1% from each.

Many larger employers offer to match additional pension contributions employees are willing to make. Some will match their contribution by up to 9%.

But, analysis from insurer Royal London shows the take up for this is very low - at some firms it's just one in ten workers.

For instance Nationwide Building Society has recently changed its pension policy to deal with apathy from workers.

It found that despite offering a generous additional match to pensions contributions for staff saving more than the minimum, just one in ten staff were taking advantage.

Nationwide now makes the maximum contribution as standard for employees and those who don't want to save more than the minimum can opt out.

This had led to more than eight in 10 staff are benefiting and saving more towards their retirement.

Royal London says a 40 year-old average earner, who took advantage of an additional 3% employer matched contribution, would have an extra £3,500 yearly income, compared to someone who contributed just the minimum level.

This could make the difference between an income in retirement of £19,050 without extra contributions and £22,500 for those who took up their full employer match.

Steve Webb, Royal London Director of Policy, said: "Millions of workers are missing out on 'buy-one,get-one-free' money from their employer in the form of matching pension contributions.

“Much more needs to be done to make workers aware of the money their employer will add to their pension if they are willing to contribute a slightly higher level.

“Employees need to find out if their employer offers additional matching pension contributions and give serious consideration to increasing their contributions if they can afford to do so.”

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