Millions of workers missing out on thousands of free pension cash – how to get it
MILLIONS of workers could be missing out on free cash worth thousands of pounds in retirement.
When you save cash into your workplace pension, the company you work for pays in too.
There's a minimum amount of cash they have to pay in under auto-enrolment rules.
Employers must contribute at least 3% of your salary, and you have to pay in 5%.
Millions of Brits are now automatically paying into a pension, if they are aged over 22 and earn at least £10,000 a year.
But many companies offer more than the minimum 3% required, giving staff even more "free" cash to save for their future.
To get more than the minimum you'll usually have to contribute more yourself too, and an employer will match it.
The most generous employers even offer matching as high as 10%, if you contribute that proportion of your salary too.
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Workers who don't take up this employer matching could be missing out on free cash worth as much as £113k by the time they retire.
That's how much more someone could have if they and their employer put in 10% each, compared to the minimum of 3% and 5%.
The calculations by Royal London exclusively for The Sun reveal how much workers could be missing out on if they don't take advantage of the employer matching they're offered.
The figures are based on contributions from the age of 25 on an average salary of £26,096, and forecasts for how much their contributions and pension savings could grow through working life.
The exact amount the free cash could be worth will depend on your circumstances but the figures indicate savers could be missing out on thousands of pounds.
Sarah Pennells, consumer finance specialist at Royal London, said: “If you’re just paying the minimum amount into your pension, you could be missing out on extra money from your employer.
"It's definitely worth checking with your employer to see if they’ll match any extra money you pay into your pension pound for pound.
"Then work out if you can afford to pay in more to take advantage of that. That way, you can help build a bigger pension pot for your retirement”
Not all employers offer this matching, or do so only up to a certain amount. You can find if it's available and up to how much by speaking to your company's benefits or HR department.
Even a small increase in your contribution could save you thousands more for your post-work life, especially if it's then matched by your employer.
For instance if you increased your own contribution from the minimum of 5% to 6% and your employer matched that putting in 6% too, you'd sill have an estimated extra £48,608 for retirement.
Unfortunately you won't get this employer matching if you're self-employed as yoou work for yourself.
Top tips for getting the most out of your work pension
Here are Sarah's top tips for getting the most out of employee matching...
Find out whether your employer will pay in £1 for every extra £1 you pay into your pension. Some may match it at a lower level (such as 50p for every £1 you pay in), but it could still be worth having
Work out how much extra it would cost you. You can do this using the .
Make sure you can afford the money into your pension. Don’t leave yourself short or stretch your finances.
There are limits on how much you can pay into your pension every year, so make sure any extra money you pay in won’t take you over those limits.
You can invest up to 100% of your salary, or £3,600 a year, into your pension, whichever is higher and receive tax relief.
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There’s also a £40,000 annual allowance, which includes contributions made by you, your employer and any third-party contributions, such as tax relief.
If you contribute more than this in a tax year, you could face a tax charge.
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