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Staff could lose £10k pension pot if they wait to be auto-enrolled

Employees could miss out on £10,000 in pensions contributions if they wait to be automatically enrolled, claims an investment company.

Investment fund management company, Fidelity Worldwide, has said a pension pot could have built up over £10,000 more in pension contributions within 10 years, if staff voluntarily joined their pension scheme, rather than waiting to be auto-enrolled.

The current average employer contribution rate is approximately 6.2% of salary and the current employee contribution rate is approximately 2.7% of salary for occupational pensions schemes. In comparison, the Government's legal minimum employer contribution rates start at 1% from the employer and 1% from the employee.

Head of business development and executive director of workplace at Fidelity Worldwide Investment, Julian Webb said: "Prospective pension savers should check out their current workplace pension scheme arrangement before auto-enrolment is implemented at their company."

He added: "There may only be a small window to benefit from higher employer pension scheme contributions, so be proactive and consider your options before you are auto-enrolled."

This means an individual on average earnings of £26,200 could receive almost £2,000 in pension contributions (employee and employer combined) in their first year of saving if they voluntarily joined their company pension ahead of auto-enrolment, compared to £400 if he or she is auto-enrolled at the minimum level.

In 10 years' time, this could amount to almost £23,000 compared to £12,000 if he or she was automatically enrolled.

Employers will be given a date (between October 2012 and April 2017) by which they have to commence auto-enrolment-based on their size.