If an employee opts out of pension saving after being Auto-Enrolled and within the one month opt out period, the employee will have the value of their contribution deductions refunded by their employer. If an employee chooses to leave the scheme after their one month opt out period, they may be entitled to a refund of contributions depending on their length of service and the scheme rules.
Before Auto-Enrolment, employees were able to opt out of the pension scheme at any time. The term “opt out” is now exclusively reserved for auto-enrolment and applies to Jobholders entering a Qualifying Workplace Pension Scheme.
An opt out can only occur within the opt out window, and any contributions that have been deducted from the employee’s pay are to be refunded in the next available payroll by the employer. An opt out form is available for our schemes.
Once the opt out period has expired, the employee continues to have the right to leave the pension scheme; however the employees’ options on leaving the scheme will be subject to scheme rules and Governing legislation, similar to before Auto-Enrolment.
Any refund payable will be paid by the pension scheme and is subject to investment credit/ loss in defined contribution (DC) pension schemes. Employees who were Auto-Enrolled under a salary sacrifice arrangement will not be entitled to any refund of contributions.
Scheme leavers are identified by completion and submission of the ‘Date of Leaving’ column on the contributions schedule, along with the final contributions, via the eBusiness system.
Members leaving a defined benefit (DB) pension schemes can be processed via the eBusiness system, or by providing a withdrawal form.