Opt ins, opt outs, leavers and joiners
Once your assessment has been completed and staff categorised as eligible, non-eligible or entitled, you will have some employees ready to be automatically enrolled into your pension scheme, and some who are not.
Of course, not everyone who is enrolled wants to save into a pension, and some staff who are not included will want to join. You will also have other staff come and go over time so you need to be able to manage these individuals as easily as possible.
All staff who are assessed to join your pension scheme automatically have the right to opt-out. Your duty as the employer is to deduct the correct contribution from their salary as soon as they have been assessed as eligible, but this money will not be paid to the pensions scheme immediately. Instead you will hold on to this money in case an employee chooses to opt-out.
If an employee opts-out they should have their contributions refunded the next time you run your payroll and they will not join the pension scheme.
Contributions are paid to the pension scheme before the employee opts-out can be refunded, but the employee must act quickly. Contributions made after this opt-out window has closed cannot be refunded, and will not be accessable by the employee until they retire.
This is another reason why you should encourage your staff to take an active involvement in their pension scheme. If they don’t want to join but put off their opt-out decision, they might not see that money in their pocket again until they retire.
Note: It is part of the auto enrolment legislation that every employee is assessed again three years after your company staging date so employees will have to make this decision again in future.
Staff who have been assesed as non-eligible (see Auto enrolment for employers – Assessments) have the right to opt-in to the scheme. They can do this at any time.
If an employee opts-in to the pension scheme the employer will have to deduct and apply the correct contributions from their salary, and the employer will also have to make their minimum contributions (see Auto enrolment for employers – Contributions)
An employee who decides to joins does not have to be put in to the auto enrolment pension scheme, and the employer is not obliged to contribute, but it should still be a good quality scheme. Many employers will simply let these employees join the auto enrolment pension scheme, but you may have another pension scheme in place you prefer to use.
If an employee leaves your firm you will stop making contributions. The pension scheme should be informed of the member’s leaving date (usually this will happen autoamtically as part of your payroll process). The pension scheme should write to the employee to explain their options.
This is another reason why it is important to supply personal email addresses for your staff as far as possible. The pension scheme may ty to reach the staff member via the employer if they can’t reach the employee directly.
Note: If you have a staff member who wants to opt in but they have already opted in and left during the last 12 months the employer has the right to refuse to enrol them again.