Research from the Pensions Policy Institute (PPI), funded by Prudential, said 95 per cent of older workers would receive good value on their contributions if they stayed enrolled.

However, recent government research found about 15 per cent of over 50s were opting out, a rate far higher than the 9 per cent reported in other age groups.

The PPI said recent changes to pensions – including the phased introduction of minimum contributions for auto-enrolment and the introduction of the single tier state pension from April 2016 – are expected to boost returns for older workers.

However, it admitted for some groups it would still be better to opt-out, particularly if they have issues with affordability or debt.

PPI spokesperson Mel Duffield said “The analysis shows that, despite the higher opt out rates of around 15 per cent seen among older workers, staying in a workplace pension is likely to deliver a very good return on their own pension contributions for the vast majority of this group.

“Even so, the pension pots being built up by older workers under automatic enrolment, and particularly by lower earners, are expected to be relatively small.”

She said an average 51-year-old, who is eligible to be automatically enrolled in 2012 and who only makes the minimum level of contributions, will have built up a pension pot of about £13,000 by the time they reach state pension age.

The PPI also highlighted that Budget changes would make auto-enrolment far more attractive to older workers due to trivial commutation – small pot lump sum – changes and the ability for everyone to take their pot as a lump sum.

Turning down free money?

Pension consultant Ros Altmann explained: “The new rules remove the problems of pension saving for older workers, who might previously have been at risk of either just tipping over the old limits for cash withdrawals.

“These ‘trivial commutation’ and ‘small pots’ limits will be swept away in 2015, so pension savers will be able to take their auto-enrolment pension fund and spend it if they wish.

“In addition, there were previous concerns that older workers would find their pension income resulting in lower means-tested benefits, but now that they will be able to take their fund as cash and spend it, it will not need to count against their means-tested benefits.

“In any event, fewer pensioners will be subject to mass means-testing, as the new state pension rolls out after 2016, so the amount of money built up in an auto-enrolment pension fund will be more likely to improve people’s retirement finances.”

She added: “Even for older workers, who were the group least likely to benefit from staying in their employer’s scheme, the flexibilities introduced to pension savings in the 2014 Budget will mean those who do opt out will be turning away free money.

“As the PPI says, unless they are really in dire straits, it is hard to see why they would want to refuse their employer’s pension contribution and the tax relief.”

Pensions minister Steve Webb added: “The new freedoms announced in the last Budget have made pension saving more attractive for people of all ages. Even those relatively near retirement can stay in a workplace pension, benefiting from an employer contribution and tax relief, knowing that any pension pot they build up can be taken in full in cash when they wish.

“This is likely to boost take-up rates of automatic enrolment pensions still further beyond their existing high levels.”