Solution Properties
Solution ID:
222001000101487
Last Modified Date:
Mon Jan 27 15:03:40 UTC 2025
Taxonomy Path:
Case category//How do I...//governmental/legislative compliance
Author:
[email protected]
Processing an opt out request
Description

Employees who become active members of an automatic enrolment pension scheme can choose to opt-out. They have a limited time to do this which depends on their circumstances.

After this period, the employee can still leave the scheme, but they won’t be due a refund.

For more information, read The Pension Regulator (TPR) website on Opting out.

Sage Payroll makes this process easy by calculating any refund due, and applying it to the employees pay.

Cause
Resolution

Your pension provider sends information to your employees about opting out. The exact process depends on your provider and you should confirm this with them. 

Opt out period

  • If you send a job holder's letter to the employee, the opt-out period is one month from the date that you send the letter
  • If active membership of the pension scheme has already started, it’s one month from that date
  • You’ll use whichever is the latest date

Refunding contributions

  • Eligible Job holders who opt out of a scheme within the opt-out period, will get a refund of any contributions already made
  • Entitled workers who join a scheme, and then choose to leave, only get a refund if the pension scheme rules allow. Payroll doesn’t generate a refund for these workers. Instead, the refund comes to them from the pension provider

Process an opt out in Payroll

Once you’ve received the request to opt out an employee, you can enter the details into Sage Payroll. Any refund due will show on the employees' payslip.

▼Steps to process an opt out
  1. Process the pay run as normal until the PAY stage.
  2. Select the relevant employee.
  3. Select Manage Enrolment.
  4. Select Opt Out/Leave, then enter the following information:
     NOTE: If you don’t have the option of Opt out/Leave, it means the employee isn't currently in an automatic enrolment scheme.  
Request received Enter the date you received the opt out request from your employee.
Did the employee opt-out using a Nest paper form?

If the employee has an official Nest form, there will be a reference on it. Choose Yes.

If the employee hasn't used an official Nest form, or your notification has no Nest reference, choose No.
Opt-out reference* This field is compulsory if you choose Yes above.
Extension period used? If there’s a problem wit the opt-out notice form, you can extend the opt out period. The extension can be up to six weeks to allow the employee to provide the correct form.

To extend the opt-out period, select this check box.
Refund contributions of £xx.xx This is only available where a refund applies and the opt-out is valid. If you’re unsure, check with your pension provider.

If the employee is subject to a refund and you want to pay the refund to the employee via Payroll, select this option. You’ll see it included in the pay run.
Refund paid directly by provider This is only available where a refund applies and the opt out is valid.

If the employee qualifies for a refund and your pension provider pays it, choose this option. If you're uncertain, verify with your pension provider
  1. Select Opt out.

You may enter an opt-out date that is earlier than pay runs you have already completed. In this case, you may see a correction showing on your next available pay run.

For more information, read Understanding payroll corrections.

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