An eligible jobholder who is automatically enrolled into a workplace pension scheme may decide to opt out of the scheme. Opting out could, however, mean losing valuable retirement benefits.
How can I opt out if I don’t want to join my employer’s workplace pension scheme?
If you're an eligible jobholder, who doesn’t want to join your employer’s workplace pension scheme, you can opt out of the scheme after you have been automatically enrolled.
If you opt out of the scheme within one month of being automatically enrolled, you will be treated as if you had never joined the scheme, and any money that you have paid into the scheme will be refunded in full. You'll only receive back the payments that you are deemed to have made; you're not entitled to receive the contributions your employer may have made or any tax relief the Government has paid.
How do you opt out?
To opt out, you need to ask the pension provider for an opt-out form. Your employer must give you the contact details for the pension provider if you ask for them. You should complete and sign the form and return it to your employer (or the address given on the form). The provider of the pension scheme may allow you to opt out online. As stated above, if you return the form within one month of being automatically enrolled, any money you have paid into the scheme will be refunded in full.
If you decide to opt out, or leave, the scheme more than one month after being automatically enrolled, any contributions you have made will usually be held in the scheme until you can draw pension benefits, unless the pension scheme’s rules allow your own contributions to be refunded. You cannot normally draw pension benefits until you are aged 55 or over.
How long does opting out last for?
An opt-out from the pension scheme normally lasts for three years. If you've opted out, or stopped contributions to the scheme, your employer is required to automatically enrol you into the scheme at a later date (normally every three years), if you're an eligible jobholder at that time. If you’re still not ready to join the scheme or start paying contributions again, you can decide to opt out for a further three year period. You may also change your view and you can speak to your employer about opting in to the scheme at any time.
The reason that employers are required to automatically enrol eligible jobholders, who have opted out or stopped contributions, every three years is because your circumstances may have changed and saving into a workplace pension to build up retirement benefits may now be the right thing for you.
The benefits that you could lose if you opt out
If you're thinking of opting out, or stopping contributions, you may be missing out on valuable retirement benefits.
- The contributions that your employer makes into your pension pot;
- The tax relief that the Government adds to contributions that you make into your pension pot;
- Any benefits that your scheme may pay if you fall ill and are unable to continue working before reaching your retirement date; and
- Any benefits that the scheme might pay to your dependants if you were to die.
You can speak to a pension specialist in our team if you want more information.
How can I find out what benefits I might lose if I opt out?
You should have received a booklet outlining the benefits that the scheme provides. If you haven’t received this, or can’t find it, ask your employer or the pension provider for another copy.
Can I rejoin the scheme if I have opted out?
Your employer is required to automatically enrol you into the scheme, normally every three years, provided that you are an eligible jobholder. You may also ask to rejoin the scheme at any time, but your employer only has to action a request to rejoin once every twelve months.
Where can I find out more?
If you need more information, please contact us. A pension specialist from our team will be happy to help with whatever pensions-related question you have. Our help is always free.