Money experts are warning workers of a potential pension mistake that could “cost you tens of thousands of pounds”.
Mickey Adler (@mickey.adler) is a content creator on TikTok who shares personal finance advice, including regarding pensions and savings.
In a recent video, Mr Adler cited the issues that arise due to the UK companies’ auto-enrollment pensions.
Since 2012, employers have been gradually forced to automatically enroll eligible workers into a pension scheme, whereas it was previously up to employees if they wanted to join.
This applies if you work in the UK, are not enrolled in a scheme, are at least 22 years old, and earn more than £10,000.
Read more: Retirees need £638,000 to live comfortably until they are 100 years old
At a minimum, workers need to contribute five percent of their wages, including tax relief, into their retirement plan with their employer matching this amount by three percent.
However, Mr Adler’s TikTok broke down why this may not be as helpful to Britons looking to bolster their retirement savings significantly.
Included in the minute-long clip was the caption: “Don’t let this common UK company pension mistake cost you tens of thousands of pounds.”
He explained: “Pensions are boring and retirement is far away but if you’re living in the UK and working for a company, you’re most likely leaving money on the table. A lot of money.
“By law, UK companies are obliged to auto-enrol you into a pension scheme. The scheme is supposed to be a generic fund that tailors to everyone in the company”
According to the personal finance expert, this means that many workers are not enrolled in retirement schemes which are suited to them.
Employees in their early 60s and new graduates entering the company are being placed on the same pension schemes despite having different financial priorities.
Towards the end of the TikTok, Mickey outlined what workers can do to make sure they are taking full advantage of their pension benefits.
The content creator shared: “Firstly, I recommend you get in touch with your HR department to make sure you are also enrolled on the scheme
“Number two: find out who your pension provider is. Lastly, I recommend talking to someone that you trust who is financially savvy or finding a financial advisor
“Just make sure if you find a financial advisor that they charge by the hour or as a flat fee.”
Those interested in getting more money and pension advice can follow Mickey’s TikTok channel for more information.
