Martin Lewis warns households not to throw away ‘hidden pay rise’ worth £1,000s – how to get it
MARTIN Lewis' MoneySavingExpert.com is urging workers to make the most of a "hidden pay rise" worth thousands of pounds.
The consumer champion's website issued the stark warning in its latest newsletter.
Households will miss out on the pay rise by opting out of auto-enrolment.
The scheme works by you sacrificing some of your monthly salary to put towards a workplace pension, with your employer topping it up.
Crucially, the contribution you make as an employee is deducted before tax - so the actual amount you're putting away is less than it sounds.
As an example, if you pay 20% tax on your earnings, and your pension contribution is £80, this actually only costs you £64.
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Lewis said anyone aged 22 to 66 and earning £10,000 or more a year qualifies for auto-enrolment.
What is auto-enrolment and how do I opt in?
Auto-enrolment was introduced by the Government in 2012 as a way of helping workers boost their pensions.
Before that, you had to join a workplace pension of your own.
Employers automatically enrol you into a workplace pension scheme if you meet the requirements, meaning you don't have to do anything.
It makes monthly contributions and you also add to it yourself.
Your bosses or HR department should write to you when you've been automatically enrolled.
You can opt out of automatic enrolment, but it means you'll be missing out on a bigger pension later on down the line.
Plus, you're effectively losing tax-free cash as your employer won't be topping it up.
Bear in mind, the earliest age you can start taking money from your workplace pension is 55.
But either way, if you opt into auto-enrolment from your early 20s and stay in it until you're 55, you could be thousands of pounds better off in the long-term.
How else to boost your savings
It's worth tracing any lost workplace pensions, which in some cases can be worth tens of thousands of pounds.
You can start tracking down any lost pensions by finding any relevant paperwork and getting in touch with the pension provider.
Failing this, you can go to the HR department of your old employer to find out who the workplace pension provider was.
How does the state pension work?
AT the moment the current state pension is paid to both men and women from age 66 - but it's due to rise to 67 by 2028 and 68 by 2046.
The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age.
But not everyone gets the same amount, and you are awarded depending on your National Insurance record.
For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings.
The new state pension is based on people's National Insurance records.
Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension.
You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit.
If you have gaps, you can top up your record by paying in voluntary National Insurance contributions.
To get the old, full basic state pension, you will need 30 years of contributions or credits.
You will need at least 10 years on your NI record to get any state pension.
If neither of these options are available to you, you can try and source a lost pension via the Government's online Pension Tracing Service.
You can also try calling the service on 0800 731 0193 or +44 (0)191 215 4491 if you are calling from outside the UK.
It's free to use and lets you search a database of hundreds of thousands of pension schemes to find any contact details.
You can also boost your savings by adding any surplus cash you have from your monthly pay into an ISA or bank savings account.
You could opt for an easy-access savings account which lets you withdraw money whenever you want.
But they usually offer lower interest rates for the convenience.
Alternatively, you could try a fixed-rate savings account.
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These generally offer higher interest rates and let you leave your cash in there for a set time.
But you often can only withdraw from them a select number of times, or not at all, until the end of that set time.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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