Martin Lewis warns UK workers to stay in pension auto-enrolment for future savings
London: Martin Lewis has an important message for UK workers. If you were born between 1959 and 2003, listen up! He’s warning you not to miss out on a potential pay rise.
Lewis, the founder of MoneySavingExpert, says don’t opt out of pension auto-enrolment. This scheme helps you save money for later in life. It’s a smart move!
Your employer must automatically enroll you in a pension scheme if you earn at least £10,000 a year. This applies to workers aged 22 and older, up to the State Pension age of 66.
When you’re enrolled, your employer will notify you. They’ll tell you when you were added, how much they’ll contribute, and how to opt out if you want to.
This pension scheme is designed to give you extra money when you retire, on top of the State Pension. If you opt out, you could miss out on a lot of cash.
Remember, your employer contributes to your pension savings. By opting out, you’re giving up a pay rise. You’re losing out on extra money you wouldn’t get otherwise.
In most schemes, you’ll contribute based on your earnings between £6,240 and £50,270 a year before tax. Your employer must pay at least 3%, making the total contribution 8%—you need to pay 5% to meet this requirement.
Lewis points out that millions of UK employees have opted out of these schemes. He calls this a “huge mistake.”
On his ITV show, he explains how contributions work. For every £100 you put in, your employer adds £60. Plus, there are tax benefits to consider.
For basic rate taxpayers, you only lose £80 from your pay packet, but you get £160 in your pension. For higher rate taxpayers, it costs you £60, but you still get £160. That’s nearly triple!
Lewis emphasizes that opting out means giving up a pay rise and tax benefits. You’ll take home less now, but the future pension return is worth it. Don’t opt out unless you really have to!
