Pensions - Articles - Opted out employees lose £535m of pension contributions

 Over the course of three years, somebody earning £26,500 would have lost out on around £1,247 of contributions, £624 of which would have been contributed by their employer – enough for all inclusive holiday for two to Spain.

  

 For those earning £40,000 this figure jumps to £2,062 of which £1,031 would have been contributed by their employer.

 Auto enrolment legislation stipulates that every three years, employers must re-enrol any eligible employee that has opted out or ceased active membership of the scheme.

  

 The aim of this is to give those that may have decided not to save in a workplace pension, the opportunity to re-consider their decision.

  

 Starting on 1 October 2015, those larger employers that introduced auto enrolment in October 2012 will begin having to re-enrol their staff.

  

 To encourage people to think twice before opting out, NOW: Pensions went undercover in a fried chicken shop with some interesting results: https://youtu.be/iAsIKMvt79A

  

 Morten Nilsson, CEO of NOW: Pensions said: “People’s circumstances change and while they might not have felt in a position to save when auto enrolled initially, over the course of three years, they may feel differently. Re-enrolment gives them an opportunity to think again. This is really important as by opting out you are essentially taking a pay cut by turning your back on your employer’s contribution.

  

 “For those that have previously opted out, being put back into a scheme may be frustrating and confusing. It’s important that employers clearly explain what’s happening and why.

  

 “Convincing people to lock away their money for 40 years or more isn’t easy. But it’s important to remember that over a lifetime of saving an average earner could end up with a pension pot of £300,000. This can mean the difference between a comfortable and frugal retirement.”