Research from Unbiased.co.uk has revealed that as much as GBP2 billion of pension credits will remain unclaimed in 2008.
Even though pensioners are feeling the sharp rise of inflation and the impact of the credit crunch, approximately one in four of them are failing to claim their full pension credits.
Pension credits are a government entitlement for people aged 60 or over, guaranteeing them an income of at least GBP109.45 a week. But with between 22% and 28% of pensioners failing to realize their entitlements, this valuable source of income is being wasted by many retirees.
And what is more, working people in company pension schemes are also missing out on huge sums by neglecting to save in tax-efficient ways. In fact, high-rate taxpayers that are members of their employers’ occupational pension scheme will give an unnecessary extra GBP726 million to the tax man this year by failing to make additional voluntary contributions (AVC).
AVCs run alongside employers’ pension schemes and allow employees to pay extra into their pension which should result in a larger pension pot at retirement. AVCs benefit from the same tax relief as contributions paid into the main pension scheme, so it makes sense to benefit from this tax-efficient way of saving for retirement.
Either through confusion or apathy millions are missing out on what is rightfully theirs, and are paying more tax than they should be.
David Elms, CEO of Unbiased.co.uk, said: Failing to save for retirement has become an increasing problem for the UK population. The onset of the credit crunch has further compounded this problem, with people finding their money doesn’t go as far as it used to and so tightening their purse strings. However, this means it is now more important than ever for people to claim vital sources of retirement income in the form of tax credits.