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Employees may be missing out on higher pensions


Many employees of the UKs biggest companies are not taking advantage of opportunities to increase their pension pots, research from consultant firm Towers Watson has shown.

Staff in large companies are not taking up all the pension contributions on offer from their employers, missing out on large amounts of money, the research found.

Many large companies offer pension contributions of 10% or 11% of the employees salary. This is higher than the automatic default contribution, which usually stands at 4% or 5%. To receive the higher percentage, employees have to increase their own pension contributions. In the past, people have refrained from this as they did not want to tie up large parts of their salary into an annuity, which would pay them out a annual retirement income.

With the new pension regulations being introduced in April this year, there will be less need for pensioners to buy an annuity with their pension saving, and instead they can withdraw their savings as cash. The report claimed that it is expected that employees, especially older ones, will save more into their pension and therefore receive more pension contributions.

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