Savers over the age of 60 are throwing away up to £1.75bn in pension contributions by opting out of their workplace schemes, according to figures from Royal London.
The mutual insurer analysed its own figures, which indicated a 23 per cent opt-out rate among the over 60s compared with 10 per cent across all other age groups.
What you could have got …
According to calculations from Royal London, an individual in their 60s on the average wage paying the minimum pension contribution of 8 per cent would have a retirement pot of just under £14,000 by the time they reach age 65.
Given that pension contributions are made up of contributions from workers and their employer, to which tax relief from the government is added, you would only need to contribute about £6,600 of your own money to achieve this outcome.
This means by opting out of your pension you could be missing out on £7,000 each, the mutual insurer stated.
1.1m over 60s work full time
Royal London looked at the six-week window when a member is first auto-enrolled in a workplace pension scheme and has the choice to leave and get all his contributions back.
According to data from the Labour Force Survey, there are approximately 1.1m people aged 60 or over who are in full-time employment, which means more than 250,000 people could be affected.
If each saver stands to lose up to £7,000, then collectively this group could be missing out on as much as £1.75bn in retirement savings by opting out, Royal London added.
A benefit worth having
There appears to be a lack of understanding about the very real benefits some over 60’s are giving up. If you’re still working past 60 and are able to opt in to an occupational pension scheme without affecting your lifetime allowance, then it’s worth considering.