The number of people opting out of their auto-enrolment (AE) pension has reached 500,000 a year, analysis of Department for Work and Pensions (DWP) figures by Lubbock Fine Wealth Management has shown.

Citing data from the most up-to-date figures available (year-end 2023), Lubbock Fine highlighted that 158,000, or 9.3 per cent, of those under the age of 30 who were eligible for AE were opting out.

A further 139,000 people (9.4 per cent) aged between 30 and 40 had also opted out of AE during the year.

The firm warned that employees were missing out on valuable employer contributions by opting out of AE.

“It’s a real concern that so many younger people are opting out of AE,” said Lubbock Fine Wealth Management chartered financial planner, Andrew Tricker.

“The maths shows that if you want to build up a healthy pension pot you should invest from as early an age as possible.

“Many young people are living on such a tight budget that skipping that AE contribution seems like the only way to make ends meet.

“They have student debt to pay back, the pressure to build up a deposit for their first home and the cost-of-living crisis. It is not surprising they aren’t saving for a date that is 30 years away.

“Perhaps one solution to this could be for the DWP to provide more information to the individual on what the impact of opting out might be.”

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