Workers who refuse to pay into a pension are missing out on £15,000 in pension tax relief, new research has revealed.
More than a third of employees admitted to Prudential that they do not have a pension as part of a survey into the retirement plans of working adults.
The figure suggests around 15 million workers will have to rely on the state pension and any savings they may have to fund their retirement.
But to make matters worse for those who do not save into a pension fund, as well as facing a sharp drop in income at retirement, Prudential points out they are also missing out on significant tax relief during their working lives.
The survey found that those who do contribute to private or company pension schemes pay in an average of 6.2% of their annual incomes.
With Office of National Statistics figures suggesting that the average worker in the UK earns nearly £1 million over the course of their working lives, it is estimated that an individual making the average pension contribution of 6.2% of this income could receive a total of more than £15,000 in pension tax relief throughout their life.
And while the average tax relief on pension contributions is £334 per year for a person paying the basic rate of tax, it follows that higher rate taxpayers stand to lose substantially more by not paying into a pension scheme.
"Failing to save into a pension means not only having to rely solely on the state pension in retirement, but also missing out on the 'free money boosts' which come with pensions, such as tax relief and employer contributions," said Vince Smith-Hughes, head of business development at Prudential.
"Making regular pension contributions is a vital part of securing a comfortable retirement.
"Although saving for retirement may not be a priority for young people, the more money which is stashed away from an early age, the more likely that significant rewards will be reaped later in life.
"When coupled with the benefits of any additional employer contributions or gains through fund performance, a pension is the best way of saving for retirement, for many people."
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