Over 60s losing up to £1.75bn by opting out of schemes

Workers aged 60 and over who are opting out of their workplace pension schemes could be collectively throwing away up to £1.75bn in savings, Royal London has said.

Over 60s on the insurer’s auto-enrolment book have the highest opt-out rates among pension scheme members, with one in four (23 per cent) choosing to opt out.

Opt-out rates remain below 10 per cent across all other age groups. Royal London said that these figures are similar to those recorded by other auto-enrolment providers such as Nest.

Royal London has calculated that a worker who is on the average wage and is auto-enrolled into a pension scheme aged 60 — paying the minimum of 8 per cent contributions — will amass a retirement pot of £13,980 by the time they reach 65 years of age.

It added that this average worker would only need to contribute just over £6,600 to reach this total thanks to employer contributions and tax relief.

Given that there are approximately 1.1 million people aged 60 or over who are in full time employment, according to Labour Force Survey data, some 250,000 people could be opting out and missing out on about £7,000 in additional savings, which comes to £1.75bn.

Royal London pension specialist Helen Morrisset said: “It is understandable that someone at the age of 60 might think it is too late to save enough to make a difference to their retirement income but they are wrong.

“Our figures show older workers are throwing away thousands of pounds on retirement income by opting out of their scheme.

"We would urge anyone thinking of opting out of their auto-enrolment scheme to think twice before doing so.”

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