What are the minimum contributions?
By law, you and your staff have to pay a minimum amount into your scheme. This is set at 8% of your member of staff’s earnings. You, the employer, must pay at least 3% of this, but you can choose to pay more.
Please see the article on “Managing contributions to your pension scheme” for further guidance from The Pensions Regulator (TPR) on minimum contributions.
Who can opt out?
Employees that are automatically enrolled and those who have opted in can also choose to opt out.
As the Employer, you must not try to encourage your staff to opt out of their workplace pension (this could be considered an inducement and can incur significant penalties). Any decision to opt out must be taken freely by the staff member without influence from the employer.
What is the opt-out period?
Once employees have been enrolled into the pension scheme, they have one calendar month during which they can opt out and get a full refund of any contributions. This is known as the opt-out period. It starts from whichever date is the later of:
- the date active membership was achieved
- the date they received a letter from their employer with the enrolment information
Employees can’t opt out before the opt-out period starts or after it ends.
What do we have to do if I want to opt-out but missed the opt-out period?
If employees decide to leave the scheme outside the opt-out period, they will instead be ceasing active membership. Whether they get a refund of contributions will depend on the pension scheme rules. Usually, employees will not receive any refunds of previous pensions contributions and their contributions will stop from the date confirmed by the pension scheme provider/ administrator.
How do I opt-out or stop contributions?
Please see the guidance on “How do I opt out?” from one of the Pensions Providers called Nest and share this with any employees that are enrolled so they are also aware of how to opt out. If your pensions provider is not Nest, please consult your pensions provider on how to opt out using their system.
Your employees will receive login details from NEST in the post once they have been enrolled and they will need to follow the guidance in the link above if they wish to opt out.