Workers miss out on £15k pension tax relief

Workers who fail to save into a private pension are missing out on £15,000 in tax relief over their lifetime, Prudential research found.

The provider says 35% of workers in the UK do not have any pension other than state provision, which means they are missing out on an average of £334 in basic rate tax relief on savings every year.

Of those who do save into a company or personal pension, workers put away on average 6.2% over their annual incomes.

With average workers earning around £1m over their lifetime, individuals saving 6.2% of their annual income would receive around £15,000 in tax relief.

While the average tax relief on pension contributions is £334 per year for a person paying the basic rate of tax, higher rate taxpayers stand to lose substantially more by not paying into a pension scheme.

Vince Smith-Hughes, head of business development at Prudential, said: "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.

"In order to maximise pension benefits, to understand the impact of tax relief, and ultimately to secure a decent retirement income, it is important to seek professional financial advice."