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. You can confirm this with them.
Opt Out period
If you send a jobholder'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 jobholders 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.
Process the pay run as normal until the PAY stage.
Select the relevant employee.
Select Manage Enrolment.
Select Opt Out/Leave, then enter the following information:
NOTE:
If you don't have the option to Opt Out/Leave, it means the employee isn't 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 checkbox.
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 record 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
Select Opt Out.
You can enter an Opt Out date that is earlier than pay runs you have already completed. In this case, you can see a correction showing on your next available pay run.