Important Information for New Members Joining a DC Arrangement

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From 1 October 2015 the rules around ‘short service refunds’ for members who decide to leave an Occupational Defined Contribution Pension Scheme are changing.  

What does this mean to you?

If you decide to leave the Scheme, you may do so at any time. If you leave your employer you cannot continue as a member of the Scheme. Anyone who leaves the Scheme will have options available to them that will differ, depending on how long they have been a member of the Scheme.

Less than thirty days in the Scheme – auto-enrolled:

  • If you opt out of the Scheme within 30 days after your employer has automatically enrolled you, then you are treated as not having ever joined. Any contributions already deducted from your pay will be returned to you by your employer subject to the relevant tax and National Insurance deductions.
  • If you continue to be employed, your employer will be required to re-enrol you into the Scheme upon the anniversary of your employer staging date, which is every three years. If you are re-enrolled then you will have the option to opt out again.

Less than thirty days in the Scheme – not auto-enrolled:

  • You will receive a refund of your savings – the refund is the value of the contributions only you have paid and not the employers contributions. If you joined the scheme through a salary sacrifice arrangement, the refund will be zero.

More than thirty days service:

  • You will be able to leave your savings invested (become a deferred member) - this means holding your savings in the same place until you retire.
  • Once you have become a deferred member you will continue to have your funds invested in the Scheme until you retire, or decide to transfer the value of the whole fund to another registered pension arrangement.

To find out more, speak to The Pensions Trust on 0345 072 6780 or speak to your employer for more information.

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