Why opting out of auto-enrolment could cost you thousands

At Portafina we’re big fans of auto-enrolment. We understand saving into a pension isn’t the top of everyone’s to do list, plus they’re notoriously complicated. The beauty of auto-enrolment is you don’t need to think about paying into your pension – it just happens! The money is taken directly from your wages before it even hits your bank account. So, after a while we’re sure you won’t notice it’s gone. You even have the option to contribute more, if you feel you can.

From April 2019, 8% of your annual salary will go straight into your pension. And the good news is you’ll only be putting in half yourself. The additional 4% comes from tax relief and contributions from your employer. Put simply, that’s free money into your pension that you wouldn’t usually have. And you wouldn’t turn down free money, would you? Especially if it could be earning you thousands of pounds…

Here’s why you shouldn’t opt out of your work place pension...

*Example based on 35-year-old with no prior savings, saving for 30 years (planned retirement age 65). Earning £20,000 throughout this period. Example 3 and 4: Auto-enrolment contribution based on full salary. Additional contribution includes employer 3% and tax relief. 5% annual return applied. Auto-enrolment calculator used: Money Advice Service. Pension charges not applied. Inflation not included.

As this table shows, opting out could leave you tens of thousands of pounds worse off at a time when you really need the money. By remaining opted in to your work place pension scheme you could be in a better position at retirement. Especially if you can top up your own contribution by an amount that’s comfortable for you.

If you are unsure of what the right decision for your financial circumstances is, it is always best to speak with a regulated financial adviser. 


Call 0800 304 7288 for a friendly chat about your pension

The 4 cornerstones of a great retirement

What does retirement mean to you?

Read more

Why your pension holds the power to a better future

Discover your savings secret weapon

Find out

Where are you with your retirement savings?

Our advice for every stage

read more

Back to top