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Auto enrolment and opt out

Does a small employer have to set up a scheme for employees if they have all already said that they all plan to opt out? (Small charity in this case with only 2 employees, both trustees, in scope.)

I know they are supposed to be opted in before they can opt out, but this would seem seem to be daft - pointless bureaucracy!

Thanks,

Steve
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  • HappyHarry
    HappyHarry Posts: 1,554
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    Steve__w wrote: »
    Does a small employer have to set up a scheme for employees if they have all already said that they all plan to opt out? (Small charity in this case with only 2 employees, both trustees, in scope.)

    I know they are supposed to be opted in before they can opt out, but this would seem seem to be daft - pointless bureaucracy!

    Thanks,

    Steve

    Yes, a scheme needs to be set up. It's not daft as the employees might well realise that they are turning down free money by deciding not to partake.

    If the employees are:
    (i) over 22 and
    (ii) below state pension age and
    (iii) earn in excess of £10,000 per year (or equivalent) and
    (iv) ordinarily work in the UK
    then they must be enrolled into a qualifying pension.

    The employees will then have the option to opt-out if they so wish.

    If the employer does not enrol the employees in a pension, they are breaking the law and will face enforcement action.

    http://www.thepensionsregulator.gov.uk/en/employers/what-happens-if-i-dont-comply
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
  • Paul_Herring
    Paul_Herring Posts: 7,481
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    http://www.freshbusinessthinking.com/advising-on-auto-enrolment/
    A common misconception amongst business owners is if they don’t have staff members who want to join a pension scheme they do not need to comply, however, action does need to be taken and a scheme needs to be set up and maintained even if all employees opt out.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
  • So individuals are forced to join, have the first payment taken...and then have to wait to get the refund back when they opt out?

    Is there no way to say "I don't want it" before the payment is taken? It seems like somebody's account is going to earn an awful lot of interest when they have thousands of people's pension contributions sitting in there for a month, before they get refunded.
  • MerlinMags wrote: »
    So individuals are forced to join, have the first payment taken...and then have to wait to get the refund back when they opt out?

    You make it seem like this is a bad thing...
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  • dunstonh
    dunstonh Posts: 116,051
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    So individuals are forced to join, have the first payment taken...and then have to wait to get the refund back when they opt out?

    Is there no way to say "I don't want it" before the payment is taken? It seems like somebody's account is going to earn an awful lot of interest when they have thousands of people's pension contributions sitting in there for a month, before they get refunded.

    Why would someone refuse free money?

    Pension contributions do not earn interest. Interest does not come into it.

    Thankfully, most people do not opt out. They see the common sense of free money. It is usually only the stupid that opt out (caveat that in a very tiny number of cases, it can be sensible to opt out)
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Sorry, I didn't make the situation clear. I understand that forcing new employees to join a pension is a good idea

    I said "when they opt out". I was thinking of people like me, who've been in the job 10 years and already have one or more pensions. It seems a bit irritating to have that payment taken!
  • HappyHarry
    HappyHarry Posts: 1,554
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    MerlinMags wrote: »
    So individuals are forced to join, have the first payment taken...and then have to wait to get the refund back when they opt out?

    Yes.
    Is there no way to say "I don't want it" before the payment is taken? It seems like somebody's account is going to earn an awful lot of interest when they have thousands of people's pension contributions sitting in there for a month, before they get refunded.

    The cost of management / refunding / communicating will far outweigh any small interest benefit.
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
  • dunstonh
    dunstonh Posts: 116,051
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    I said "when they opt out". I was thinking of people like me, who've been in the job 10 years and already have one or more pensions. It seems a bit irritating to have that payment taken!

    A tiny bit of admin to get free money should offset the irritation. Plus, you can consolidate most pensions at retirement (or earlier if you leave the employer).

    It doesnt matter if you have one pension or ten pensions. it is the value and their benefit that matters. The fact is that every £1 you pay into the workplace pension is better than every other option out there.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • SW17
    SW17 Posts: 850
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    dunstonh wrote: »
    Why would someone refuse free money?

    Pension contributions do not earn interest. Interest does not come into it.

    Thankfully, most people do not opt out. They see the common sense of free money. It is usually only the stupid that opt out (caveat that in a very tiny number of cases, it can be sensible to opt out)

    Assuming one of those tiny number of cases would be someone applying for, or having, fixed or individual protection of their lifetime allowance, would the unwanted first payment from auto-enrolment automatically invalidate the protection? How would someone prevent this from happening if they can't opt out before payments start?
  • HappyHarry
    HappyHarry Posts: 1,554
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    SW17 wrote: »
    Assuming one of those tiny number of cases would be someone applying for, or having, fixed or individual protection of their lifetime allowance, would the unwanted first payment from auto-enrolment automatically invalidate the protection? How would someone prevent this from happening if they can't opt out before payments start?

    They need to opt-out within the 30 day period after they have been automatically enrolled. Providing they do, protection is not lost.
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
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