Over 55s three times more likely to opt out of AE – NOW: Pensions

Over 55s are three times more likely to opt out of auto enrolment pensions than their younger counterparts, NOW: Pensions has reported.

According to recent data from the pension provider, among NOW: Pensions’ members aged 55 and over, the opt-out rate is 22 per cent, in comparison to just eight per cent for those aged under 55. For 20 to 40 year olds, the opt-out rate is even lower at seven per cent.

NOW: Pensions noted that while over 55s are three times more likely to opt-out of workplace pensions than their younger colleagues, they could double their money if they remained enrolled.

Someone earning the average UK wage of £27,000 per year could miss out on up to £422 a year if they decided to opt out, the firm noted.

Considering the higher opt-out rates among older savers, NOW: Pensions policy director Adrian Boulding believes that pension providers have failed to communicate effectively about the benefits of AE with older people.

“Whilst they may think that it makes sense not to have another pension scheme – perhaps they think they’ve saved enough, or perhaps 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,” Boulding said.

Boulding concluded: “Whilst some people who are near the lifetime limit do need to opt out, if you are not in that situation then it just doesn’t make sense to opt out – especially at older ages! … You could more than double your money by putting it into a pension.”

    Share Story:

Recent Stories

Sovereign bonds and climate change considerations
In Pensions Age's latest podcast, Laura Blows is joined by Hilary Norris, Product Manager, Sustainable Investment, EMEA, FTSE Russell, to discuss sovereign bonds and climate change considerations

Climate Investing
Laura Blows speaks to Aled Jones, Head of Sustainable Investing for Europe at FTSE Russell, and Adam Matthews, Director of Ethics and Engagement for the Church of England Pensions Board, about the role of climate investing within a pension fund portfolio.

Managing volatility
In the latest Pensions Age podcast, Laura Blows speaks to Cambridge Associates head of European pension practice, Alex Koriath, about the Covid-related market volatility and how pension funds can prepare for the challenges ahead

Risk transfer opportunities
Laura Blows speaks to Lisa Purdy, Head of Fiduciary Distribution at Legal & General Investment Management and Gavin Smith, Pricing and Execution Director - UK PRT at Legal & General, about the impact of the recent market volatility on the bulk annuity and risk transfer market and the potential opportunities for the future

De-risking options for pension schemes
In this latest Pensions Age podcast, Linklaters' Sarah Parkin talks to Laura Blows about the wide range of choice available to pensions schemes for the partial, or full, removal of their risks