UK workers miss out by failing to join company pension schemes

UK workers are missing out on a £5.07 billion a year by failing to join company pension schemes.

The findings from new research conducted for Prudential reveals that 66% of UK workers (fulltime and part-time) knew their employees offered a company pension as part of their remuneration package and those polled said employers will pay an average of 11.33% of earnings to their schemes.

Yet despite this, 18% of these workers are failing to join the occupational pensions on offer which, based on the UK average annual salary of £19,494.80 per annum for full and part time staff, means they are turning down an extra £2,208 a year on top of their salaries.

Across the UK the 18% of workers who currently have not joined their occupational schemes are surrendering over £5 billion of pension perks every year.

The research additionally found that more than one in four (26%) of UK working adults believe that their employer does not offer a pension scheme as part of their employment package, this rises to a staggering 37% of those aged 18 - 24 year olds. This is despite all companies being legally obliged to provide a stakeholder pension scheme as a minimum part of staff employment packages.

On the back of these findings, Prudential is calling for employers and their staff to work together and ensure that they take the pension benefits they are entitled to.

Martyn Bogira, Defined Contributions Director, Prudential states: "Britons are taking voluntary cuts of over £5 billion per annum in their employee benefits by failing to join a company pension scheme. Missing out today on these benefits will play havoc with peoples' retirement plans in the future. But it's a problem with an easy solution. We would strongly encourage all staff to check the terms of their company pension and ensure they understand how much additional money they are losing out on by failing to join these.

"It is critical that UK adults ensure they are building an adequate retirement savings pot if they are to enjoy a financially secure future and avoid having to work past traditional retirement ages or having to significantly reduce their standard of living in retirement.

"Two steps are all that's needed to stop losing out. Firstly, employees should check with their employer to find out what occupational scheme is available to them. Secondly, we would encourage people to visit an IFA to ensure all their savings and assets, together with the benefits offered to them as part of their employment packages, are working for them to enable them to build the retirement fund they need to achieve their goals."

Prudential has launched an easy-to-use retirement planning website to help consumers and employers tackle retirement issues, visit pru.co.uk/retireyourway