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20 Oct 2014

Younger Workers Embracing Auto-Enrolment

The reaction to auto-enrolment has shown a clear divide between older and younger workers, This Is Money reports, with a stark difference in the number of people choosing to opt out of the scheme.

According to research by the government pension scheme, the National Employment Savings Trust (NEST), one in four employees over the age of 60 have chosen to opt out auto enrolment; compared to just 5% of those under 30.

Furthermore, it was found that opt-out figures shrank on a clear sliding scale when looking at results down through the age groups.

Auto-enrolment is a phased process for UK workers aged between 22 and retirement age, and has so far seen an extra 4.5 million begin to save for their retirement. Compliance for employers will come at different times depending on the size of the company, but will be compulsory for all by February 2018.

Whilst making the decision to accept a workplace pension can be difficult, experts advise that choosing to opt out could mean missing out on significant amounts of money; Ros Altmann, a Government spokesperson for older workers, stated that:

“Older people should probably be attracted to stay in the workplace pension. If they opt out they´d be turning down free money from their employer and Revenue & Customs.”

As of April 2015, new freedoms allowing those aged over 55 to choose how much they take out of their pensions - and when - mean that auto-enrolment will be even more appealing. Three-quarters of the money taken from a pension pot is taxable; but money added by the employer should make up for this shortfall.

For Tim Jones, chief executive of the NEST, this means that auto-enrolment should be a “no-brainer” for older workers, as they can double the value of their own contributions.

Copyright © M2 Bespoke 2014

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