Members urged not to opt-out of incoming AE increases

A pensions specialist is urging people not to opt out of their workplace pension when their pension contribution increases from 3 per cent to 5 per cent on 6 April.

Issuing the warning, Profile Pensions said that by saving just £27 a week from the age of 30 could result in a pension pot of £125,000 by the time you reach retirement.

According to the pensions specialist, saving 8 per cent of a medium annual income of £28,677, from the age of 30, could result in the £125,000 pension pot by the time you reach 67.

Profile Pensions chief investment officer, Michelle Gribbin, commented: “The workplace pension scheme is to the benefit of UK employees and designed to help everyone prepare for their financial future.

“Together, the employer contribution, tax relief, and investment growth offer the ability to significantly increase the value of your money for a time in your life when you will really need it.”

Profile Pensions added that more people need to be financially aware when it comes to pensions, with many not understanding what the changes to the basic contribution rates to workplace pensions mean for their take home pay.

Gribbin added: “Straightforward pension advice is a vital step in the personal finance education process.

"When people really understand what these contributions mean, where they come from, and how opting-out impacts their financial future, they become empowered to make their own informed decisions and potentially be over £125,000 better off in retirement.”

Furthermore, the 20 per cent tax relief given to those contributions means that many members will be paying less for their contribution.

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