Pensions Guide - Opting Out
If an employee is automatically enrolled, they can opt out within a limited period (normally a month) and get their money back.
An employee can stop paying into a pension after the end of the opt-out period but they don't have the right to a refund. This is called ceasing active membership and shouldn't be confused with opting out.
When an employee opts out:
- Check the employee followed the pension provider's opt-out procedure within the opt-out period.
- Click the employee's name in the options list.
- Click the 'Pensions etc' tab.
- In the Pension Memberships and Contributions section, click the blue word 'View'.
- Click 'Edit Details' and fill in these boxes:
- Opt-Out Reference: Enter the pension provider's opt-out reference, if you have it, otherwise leave it blank.
- Exit Date: Enter the date the employee opted out.
- Exit Type: Select 'Valid Auto Enrolment Opt-Out' (only for valid opt-outs. If they missed the opt-out deadline, see below)
- Click 'Save Changes'.
- In the 'Pension Contributions' section of the page, refund the contributions:
- If the contribution type is 'Auto Enrolment Min', click 'Refund' and 'Save Changes' and the refund will be calculated automatically.
- For any other contribution, change it to a negative fixed contribution of the refund amount and click 'Save Changes'. After the next pay run, you'll need to change it back to '0.00' to avoid refunding it twice.
After the Opt-Out Deadline
If the employee asks to leave the pension scheme after the opt-out window, they haven't opted out but 'ceased active membership'. The steps are the same as above except:
- For the membership 'Exit Type', choose 'Active Membership Ceased'.
- Pension contributions aren't refunded but should stop:
- If the contribution type is 'Auto Enrolment Min', click 'None' and 'Save Changes'.
- For any other contribution, change it to fixed contribution of '0.00' and click 'Save Changes'.
Telling your Pension Provider
If you use our system to create contribution files for your pension provider, these will automatically include details of employees who have opted out. For more information, please see our guide on How to Transfer Information to Your Pension Provider.