23% of over 60s are opting out of auto-enrolment
According to research by Royal London, over 60s are throwing away up to £1.75bn in pension savings by opting out of their workplace pensions. Could you be one of them?
23% of over 60s are choosing to opt-out of auto-enrolment, meaning they could be missing out on significant savings towards their retirement.
What’s the financial impact?
According to Royal London, if someone aged sixty on the average wage were auto-enrolled into a pension scheme and paid the minimum of 8% contributions then they would have amassed a retirement pot of £13,980, that’s almost £14,000, by the time they reach age 65.
The pension contributions for the auto-enrolment scheme are made up of the employee’s contribution, the employer’s contribution and tax relief from the government. Because of this, the employee would only need to contribute £6,600 of their own money to achieve the figure above.
By deciding to opt-out of auto-enrolment, they could potentially miss out on £7,000 of retirement savings.
There are 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 of these stands to lose up to £7,000 each then collectively this group could be missing out on as much as £1.75bn in retirement savings by opting out.
Why are people opting out?
We often find that people don’t understand how pensions work and so, over 60s who are opting out may not realise what they are giving up. It can be challenging to work out how much money you could potentially receive towards a retirement income from your workplace pension, especially if you do not have a financial background. People over 60 often assume that they don’t have enough time to make any real difference to their retirement income, without having any financial information to base that assumption on.
They may also not need the additional income and think they are doing the noble thing by opting out as they don’t need the money. However, what they are not considering is that circumstances can change and also the additional pension that you could build up may allow you to use savings elsewhere to pass wealth on to loved ones or achieve other goals you have.
Review your retirement plans
It is crucial to understand what your costs are likely to be in retirement and how much income your savings, pensions and other assets or investments could potentially provide. Without these two figures, it is almost impossible to see if you will have enough money in later life.
People often have multiple pensions and have sometimes lost track of them through moving house or changing jobs. MRA Ltd’s Life Centred Financial Planners help clients collate all the information needed to get an accurate picture of their current retirement provision.
But this is just the financial side of things. MRA Ltd’s Life Centred Financial Planners are passionate about helping people achieve the things they really want and creating the best life possible with the resources they have. We take time to understand what you are trying to achieve, after all you have been saving hard all your working life for something – what is it? Perhaps it’s to have a comfortable retirement spending time with the grand-kids, or maybe you have ambitions of a world cruise. They help you to get really clear on what your goals are so that we can then work together to build a bespoke financial plan that supports those aims.
MRA Ltd use cash flow forecasting software so that you can easily see the potential impact of things such as cost of living and inflation. In a clear pictorial format, you can understand what the financial impact is if you or your partner dies, if you needed additional care at a later stage, and the part your state pension can play in topping up your retirement income, as well as any other scenario you can think of. This makes it simpler for you to make decisions about your future.
MRA Ltd’s Life Centred Financial Planners are there to highlight any area you may not have considered too. Such as not opting out of auto-enrolment and identifying the potential financial impact, which could mean giving you an estimate of the sum of money you could be missing out on. At least you would then be making an informed decision and not going off an assumption you had about how workplace pensions work.
Whether you have 30 years or 5 years until you retire, MRA Ltd can assist you in building a retirement plan and work with you to identify ways to increase your savings, if you need to, to help you enjoy your retirement.
MRA Ltd offer a complimentary 1-hour consultation, with no obligation to sign up to anything. So contact us today and speak to one of MRA Ltd’s Life Centred Financial Planners about your concerns around retirement, how pensions work or the alternative ways you can provide an income for yourself in later life, and start creating a brighter future for you and your family.
If you found this information useful, you may also want to check out the following:
Mike Robertson Associates Limited (MRA Ltd) is an appointed representative of Lighthouse Advisory Services Limited which is authorised and regulated by the Financial Conduct Authority. See here for full details.
MRA help individuals, businesses and families achieve the best quality of life they can with the resources they have. MRA specialise in corporate solutions, cash-flow analysis, life centred planning and much more.
Business Consultants based in East Sussex we service clients across the South East, Sussex and Kent, including smaller towns such as Ashford, Battle, Bexhill, Bodiam, Brighton & Hove, Cranbrook, Crowborough, Eastbourne, Hailsham, Hastings, Heathfield, Herstmonceux, Lewes, Mayfield, Newhaven, Rye, Seaford, Sevenoaks, Tenterden, Tonbridge and Tunbridge Wells.