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Daily Mirror
Daily Mirror
Business
Sam Barker

Martin Lewis warns workers could be 'turning down a pay rise without realising it'

Martin Lewis gave Brits valuable advice on how to get the most out of their pensions - and avoid mistakes that could cost them thousands.

Speaking on the ITV Martin Lewis Money Show, the MoneySavingExpert founder said: "Your pension may provide income for a quarter of your life.

"It's important to get them right, as small mistakes can cost you tens of thousands of pounds."

The first tip Lewis had was to track down any lost pensions you might have.

He said there is around £20billion in pensions currently unclaimed in British retirement pots.

This can happen when an employee moves jobs and forgets about their old pension, for example.

Martin Lewis hosted a special pensions episode to give advice on retirement cash pots (ITV)

The government has an online Pension Tracing Service that can help track down old pensions, though it temporarily crashed during the programme.

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The MoneySavingExpert founder had sage advice about our retirement pots (ITV)

Lewis also advised Brits not to ignore their pension in favour of other ways of putting cash aside, like savings.

While saving is important, no savings deals come close to beating the returns pensions get, he said.

Lewis added: "There's nowt out there like it. Saving doesn't come close. In general you would be far better off using a pensions wrapper."

Since 2012, UK workplaces have been auto-enrolling their staff onto private pensions.

Employers have to auto-enrol staff in the UK earning more than £10,00 a year and aged from 22 to the state pension age, currently 66.

Under auto-enrolment, workers have to save at least 8% of their salary a year into a pension.

Normally part of this comes from a worker's own salary, and part from their employer.

So if a worker puts in 5%, their employer will add an extra 3%.

These workers can opt out of these schemes, but Lewis urged them not to unless they had no other choice.

"My big message is: opt out and you are effectively giving up a pay rise," he said.

That is because, when workers save into a pension, what they contribute is not taxed until they come to withdraw it - by which time it should have grown considerably.

Lewis also said that consolidating pensions can help workers keep track of multiple pots - and help save money on yearly fees.

But he said anyone doing this should beware of fraudsters, who pretend to offer consolidation services to get their hands on retirement cash.

He said "One really important warning - if you are sitting at home and someone is calling up offering consolidation, be very careful as there are a lot of scammers out there."

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