More than a fifth of over-55s have opted out of auto-enrolment (AE), Now Pensions’ customer data has suggested.
Nearly a quarter (22%) of over-55s have opted out of the master trust, a rate almost three times higher than for under-55s (8%).
For someone earning the average wage of £27,000, this means they lose around £422 each year if they then invest their money in a bank or building society instead of a pension where they will receive employer contributions and tax relief.
Now Pensions policy director Adrian Boulding said these savers may be misunderstanding the benefits of staying in a pension.
He said: “While they may think it makes sense not to have another pension scheme – perhaps they think they’ve saved enough or they feel they can’t afford it – 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.”
The master trust said, at current AE contribution rates of 1% from the employer, 0.8% from the employee and 0.2% from tax relief, a higher-rate taxpayer earning £57,000 would miss out on around £456 per year by leaving money in the bank.
The master trust’s opt-out figures are similar to those compiled in a Department of Work and Pensions 2014 study, which found the opt-out rate for over-50s was 23%. PP has explored why the figures are so starkly higher for older savers.
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