Workers 'may lose pension benefits'

Workers who are automatically signed up to a company pension could end up missing out on state pension benefits when they retire, the Government has been warned.

From next year, new rules will mean all workers will be auto-enrolled into their employer's pension scheme - although they'll still be able to opt out if they choose.

But the National Association of Pension Funds warned there was a risk that workers signed up to the schemes could lose out on means-tested benefits in future unless the Government acts to change the system.

The group wants the state pension made more simple, so that everyone gets £140 a week without the need for means-testing.

NAPF chairman Lindsay Tomlinson said: "Unless it tackles the means-testing trap, the Government faces a major mis-selling scandal."

Under the auto-enrolment plans, workers would put in 4% of their pay, their employer would contribute 3% and the Government 1%. If a firm didn't have a pension scheme, then the worker would be signed up to a state scheme - the National Employment Savings Trust.

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