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Tax Relief – 216,000 missing out

It has been revealed that individuals paying higher rates of tax are failing to pay into pension schemes, and are subsequently missing out on free money in the form of tax relief. According to a survey from Prudential, the total amount per year that higher rate tax payers are missing out on is around £438m, as a quarter are failing to take advantage by using a pension scheme.

Anyone who opts not to pay into a pension scheme misses out on pension tax relief, and it is thought that a total of 216,000 employees across the UK currently do not use pension schemes.

Tax relief on pension schemes is not received by you as an employee, but will be added by the government into your pension pot, in order to encourage you to save by providing a boost to your contributions.

However many are shunning pensions schemes because they believe they cannot afford them. Within the survey, 21pc of those earning between £42,275 and £149,999 said they had thought about contributing to a pension scheme, but felt that they did not have enough spare cash to contribute. Another 13pc said they do not see any point in saving for retirement, and 17pc could not think of a reason why they don’t save.

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