Over three million employees could be missing out on workplace pension top-ups worth up to £650 year, according to figures by insurer Royal London.

Big companies often offer to 'match' contributions made by an employee if they choose to save more into their pension than the minimum level required.

But Royal London claims many staff are unaware of this valuable benefit and are failing to take advantage of the boost.

Free money

Saving into a pension is an easy way to give yourself a pay rise as you benefit from ‘free money’ in the form of tax relief and extra contributions from your employer.

[Read more: Why you should think about pensions AND property for your retirement]

The minimum levels for workplace pension contributions are currently set at 1% from workers and 1% from employers, but some firms are more generous and will match additional contributions by as much as 9%.

Royal London has calculated the impact of missing out on this perk by making assumptions about the number of people working in large firms, the typical levels of ‘matching’ contributions and the estimated levels of take up.

It reckons that around 3.2 million workers that don’t take up the full typical match and only contribute the minimum are missing out on ‘free money’ worth £2 billion annually, or an average of £650 per year each.

This can make a major difference to your eventual retirement income.

Royal London calculated that a worker earning an average wage at the age of 40 that takes advantage of an additional 3% employer matched contribution would receive a retirement income of £22,500 rather than £19,050, thanks to the extra contribution and tax relief.

One way to tackle the problem

Nationwide recently altered its pension policy to deal with this problem.

Even though the firm has a generous additional ‘employer matched contribution’ of between 5% and 9% only one in 10 members were taking advantage.

Now Nationwide offers a maximum contribution of 7% to workers as standard. The change means now more than eight in 10 members are benefiting from the company’s generous scheme.

But Nationwide is a rare case, so Royal London is calling for more to be done to make workers aware of the extra cash they could get if they were willing to put more in.

Steve Webb, Royal London Director of Policy, said: “Millions of workers are missing out on ‘buy-one, get-one-free’ money from their employer in the form of ‘matching’ pension contributions. 

“At a time when money is tight for many people and pay rises may be limited, getting your employer to contribute more to your pension can be a very cost-effective strategy.

 “Much more needs to be done to make workers aware of the money their employer will add to their pension if they are willing to contribute at a slightly higher level.”  

[Read more: How to invest pension freedom cash for low-cost growth]

How to boost your pension

If your employer offers a workplace pension it’s worth joining.

When you put money in, you’ll a ‘free topup’ via tax relief on the contribution, plus a contribution of at least 1% from your employer rising to 3% by April 6, 2019.

If you are already enrolled check how much you are contributing, if you can put more in and whether your employer will match it.

Webb added: “When individuals are thinking about where to put their money to get the best return, the chance to more than double your money through an employer contribution and tax relief from the government takes a lot of beating.

“Employees need to find out if their employer offers additional matching pension contributions and give serious consideration to increasing their contributions if they can afford to so.   Where the individual has other financial options, they may find it helpful to seek independent advice”. 

If you are already taking advantage of your workplace pension and aren’t able to boost contributions to get more from your employer you could try saving into a Lifetime Isa as well.

The Lifetime Isa is a new tax-free savings account for those that want to save for their first home or retirement, which pays a 25% Government bonus worth up to £1,000 each year. Sadly, it's only available to those  aged under 40.