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Three-quarters fail to take advantage of pension tax relief

Research published by Scottish Widows has revealed that as many as three quarters of potential UK investors are not taking advantage of tax relief from a personal pension. For every pound saved in a pension, Her Majesty's Revenue and Customs (HMRC) gives a basic rate taxpayer a 22p and a higher rate taxpayer a 40p contribution. However, the research found that, of those considering financial investments, only 19 per cent of basic rate taxpayers and 37 per cent of higher rate taxpayers contributed to a personal pension plan, meaning that over 18.7 million UK tax payers are missing out.If these potential investors began to save £100 a month in a personal or stakeholder pension, the typical basic rate tax payer contributing from age 30 to 65 could have their pension fund boosted by £27,000, or £54,000 for a higher rate tax payer.Ian Naismith, head of pensions market development at Scottish Widows, said: "Our research shows that many UK tax payers aren't taking advantage of the tax-breaks available through saving in a personal pension scheme. "Many do not realise the tax advantages of pensions, or that you can pay into a personal pension as well as into your employer's scheme."He added: "Saving in a pension makes sense because the taxman gives you money. "The UK as a whole is seriously undersaving for retirement and our calculations shows that the typical saver's retirement pot is significantly boosted by the money they could get back from Her Majesty's Revenue and Customs. "Any boost to retirement savings should be welcomed with open arms and could help bring people closer to the levels they should be saving in order to enjoy a comfortable retirement."

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