More than 3 million people could be missing out on a pension top-up from their employer by failing to make a small contribution into their workplace pension scheme.
According to Royal London, many larger businesses offer valuable ‘matching’ contributions on workplace pensions.
The minimum contribution level to a workplace pension scheme is based on qualifying earnings. The rates are set to rise from April 2018:
|Date||Minimum employee contribution||Minimum employer contribution|
|Before April 2018||1%||1%|
|April 2018 - April 2019||3%||2%|
|After April 2019||5%||3%|
However, employees who don’t take up the offer from their employer could be missing out on an extra £650 of income per year.
Royal London estimates that a 40-year-old employee on average earnings who takes full advantage of the employer contribution would have £3,500 per year more than a worker contributing the minimum amount.
Steve Webb, director of policy at Royal London, said:
“When individuals are thinking about where to put their money to get the best return, the chance to more than double your money through an employer contribution and tax relief from the government takes a lot of beating.
“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 so.”
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