School may be out for summer but many students and their proud parents will be starting to gear up for graduation ceremonies.

Beyond the hat and gown, graduates will soon be entering the jobs market and Royal London warns while many will be looking to pay off their student debt immediately, that shouldn’t necessarily be their main financial priority.

The provider has expressed some concern that those with high levels of student debt may focus on paying that off and will therefore opt out of their workplace pension.

This can be damaging to their future retirement.

Helen Morrissey, personal finance specialist at Royal London, said:  “A new graduate may look at their student debt and want to get it down as quickly as possible, perhaps even opting out of their workplace pension in order to free up extra cash.

“Most graduates will never pay off their student debt in full and the balance will eventually be written off.  Meanwhile, opting out of workplace pensions means losing the contribution from your employer, possibly over a period of decades.   Those who stay in pensions will see their money and their employer’s contribution grow over time and they will also benefit from tax relief on their contributions.

“With graduate pension pots already facing a squeeze due to student loan repayments, any further reduction could pose a devastating blow to a graduate’s retirement fund.  Therefore it is essential that employers and the government communicate the benefits of pension saving clearly to Britain’s new graduates.”

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen