Martin Lewis warns millions of workers who are aged between 22 and 66
Martin Lewis has warned millions of UK employees who have opted out of pension auto-enrolment schemes they have made “a huge mistake”. Your employer must automatically enrol you into a pension scheme and make contributions to your pension if all of the following apply: you're classed as a 'worker', you're aged between 22 and State Pension age and you earn at least £10,000 per year.
Speaking on his ITV Martin Lewis Money Show, the 52-year-old said: “Whether you are a basic 20% or higher 40% taxpayer, for every £100 you put in, on the minimums your employer would have to add £60 towards your pension pot. But then, we have to look at the tax here.
“Because of course, what you have to remember is for you to put in £100 you don’t actually lose £100, because most people - basic rate taxpayers - you only take home £80 of it, £20 would be tax. So in effect, you lose £80 in your pay packet but you get double that - £160 going into your pension.
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“For a higher rate taxpayer it costs you £60 and you get £160 - nearly triple going into your pension, and that is unbeatable. There’s nothing out there like it. Which is why my big message here is, opt out and you’re effectively giving up a pay rise and you’re giving up the tax benefit too.
“Of course you’re going to take home less but what you get in the pension return - the doubling or nearly trebling - is so important, so don’t opt out unless you absolutely have to.” Your employer must write to you when you’ve been automatically enrolled into their workplace pension scheme. They must tell you the date they added you to the pension scheme.
They must also tell you the type of pension scheme and who runs it, how much they’ll contribute and how much you’ll have to pay in, how to leave the scheme, if you want to and how tax relief applies to you.