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  • FIRST POST
    • Steve__w
    • By Steve__w 27th Jul 16, 9:01 AM
    • 1Posts
    • 0Thanks
    Steve__w
    Auto enrolment and opt out
    • #1
    • 27th Jul 16, 9:01 AM
    Auto enrolment and opt out 27th Jul 16 at 9:01 AM
    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
Page 1
    • HappyHarry
    • By HappyHarry 27th Jul 16, 10:03 AM
    • 329 Posts
    • 387 Thanks
    HappyHarry
    • #2
    • 27th Jul 16, 10:03 AM
    • #2
    • 27th Jul 16, 10:03 AM
    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
    Originally posted by Steve__w
    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
    • By Paul_Herring 27th Jul 16, 10:09 AM
    • 6,108 Posts
    • 2,788 Thanks
    Paul_Herring
    • #3
    • 27th Jul 16, 10:09 AM
    • #3
    • 27th Jul 16, 10:09 AM
    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
    • MerlinMags
    • By MerlinMags 23rd Sep 16, 10:40 AM
    • 91 Posts
    • 128 Thanks
    MerlinMags
    • #4
    • 23rd Sep 16, 10:40 AM
    • #4
    • 23rd Sep 16, 10:40 AM
    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.
    • TrustyOven
    • By TrustyOven 23rd Sep 16, 1:20 PM
    • 516 Posts
    • 596 Thanks
    TrustyOven
    • #5
    • 23rd Sep 16, 1:20 PM
    • #5
    • 23rd Sep 16, 1:20 PM
    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?
    Originally posted by MerlinMags
    You make it seem like this is a bad thing...
    Goals
    Save 12k in 2017 #016 (2040.32 / 10k) (20.40%)
    Save 12k in 2016 #041 (4558.28 / 6k) (75.97%)
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    • dunstonh
    • By dunstonh 23rd Sep 16, 4:51 PM
    • 87,698 Posts
    • 52,928 Thanks
    dunstonh
    • #6
    • 23rd Sep 16, 4:51 PM
    • #6
    • 23rd Sep 16, 4:51 PM
    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). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • MerlinMags
    • By MerlinMags 24th Sep 16, 8:04 AM
    • 91 Posts
    • 128 Thanks
    MerlinMags
    • #7
    • 24th Sep 16, 8:04 AM
    • #7
    • 24th Sep 16, 8:04 AM
    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
    • By HappyHarry 24th Sep 16, 8:22 AM
    • 329 Posts
    • 387 Thanks
    HappyHarry
    • #8
    • 24th Sep 16, 8:22 AM
    • #8
    • 24th Sep 16, 8:22 AM
    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?
    Originally posted by MerlinMags
    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
    • By dunstonh 27th Sep 16, 11:36 AM
    • 87,698 Posts
    • 52,928 Thanks
    dunstonh
    • #9
    • 27th Sep 16, 11:36 AM
    • #9
    • 27th Sep 16, 11:36 AM
    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). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • SW17
    • By SW17 28th Sep 16, 6:44 AM
    • 826 Posts
    • 529 Thanks
    SW17
    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)
    Originally posted by dunstonh
    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
    • By HappyHarry 28th Sep 16, 8:30 AM
    • 329 Posts
    • 387 Thanks
    HappyHarry
    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?
    Originally posted by SW17
    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.
  • jamesd
    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?
    Originally posted by SW17
    They can tell their employer not to automatically enrol them because they have lifetime allowance protection. This is one of the exceptions to the auto-enrolment rules that allows an employer to not enrol:

    "With effect from 1 April 2015, The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations (S.I. 2010/772) have been amended so that, where the employer has reasonable grounds to believe that a jobholder has enhanced protection, fixed protection or fixed protection 2014 (with the onus on the jobholder to tell them so), they are no longer required to automatically enrol or re-enrol that jobholder, meaning that there will not be a need for the jobholder to opt out. It will be a matter for the employer to decide whether or not to exercise the discretion not to auto-enrol or re-enrol the jobholder and to decide what is reasonable grounds to believe the jobholder has enhanced protection, fixed protection or fixed protection 2014. A copy of the HMRC certificate is one such way to demonstrate reasonable grounds."

    That page is linked to as the relevant one for for example FP2014 even though it's formally not about that.

    The HMRC online service status can be printed out to use as evidence instead of a HMRC certificate.

    An employer can't be forced not to enrol and if they do it anyway then opting out is required.
    • Alan Anderton
    • By Alan Anderton 8th Jan 17, 10:07 AM
    • 1 Posts
    • 0 Thanks
    Alan Anderton
    Hi, thanks for the info so far. I've just started a new job as the first (and only) employee with a small charity. I am 64 and will be eligible for my state pension in September. Will it still be in my best interests to pay in to a pension scheme they will need to set up, or opt out and make my own arrangements ? Will they have to pay into the scheme as well, if I am the only employee .
    • dunstonh
    • By dunstonh 12th Jan 17, 2:39 PM
    • 87,698 Posts
    • 52,928 Thanks
    dunstonh
    Will it still be in my best interests to pay in to a pension scheme
    yes. Free money is still free money.

    or opt out and make my own arrangements
    no free money with that option.

    Will they have to pay into the scheme as well, if I am the only employee .
    They are required to pay into their arranged auto-enrolment scheme but are not required to pay into an individual arrangement put in place by you.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • MerlinMags
    • By MerlinMags 9th Feb 17, 10:08 PM
    • 91 Posts
    • 128 Thanks
    MerlinMags
    I didn't realise that employers HAD to make contributions to the new style pensions. I was confused by talk of "free money" above, until I spotted the MSE guide which says "Auto-enrolment is like a pay rise":
    http://www.moneysavingexpert.com/savings/auto-enrolment
    • Paul_Herring
    • By Paul_Herring 10th Feb 17, 10:15 AM
    • 6,108 Posts
    • 2,788 Thanks
    Paul_Herring
    until I spotted the MSE guide which says "Auto-enrolment is like a pay rise":
    http://www.moneysavingexpert.com/savings/auto-enrolment
    Originally posted by MerlinMags
    Realistically, what most businesses do is reduce pay rises to pay for the money they have to put into pensions.
    Conjugating the verb 'to be":
    o I am humble
    o You are attention seeking
    o She is Nadine Dorries
    • greenglide
    • By greenglide 10th Feb 17, 3:00 PM
    • 2,631 Posts
    • 1,658 Thanks
    greenglide
    reduce pay rises to pay for the money they have to put into pensions.
    But not if workers are only on minimum wage which many will be.
    • AbbieCadabra
    • By AbbieCadabra 15th Mar 17, 12:11 PM
    • 1,549 Posts
    • 935 Thanks
    AbbieCadabra
    just for info in case anyone is looking in future, we set up our scheme with NEST & during the opt-out period, you take the pension contribution from wages but don't actually pay it to NEST. all our employees opted out & i 'refunded' any contributions taken in their next weeks wages after opt out showing as confirmed on NEST.

    it's been a bit of a faff & NEST aren't the easiest to deal with for any queries, but all done now & just have to review again in 3 years time. their website leaves a lot to be desired for ease of use, but i would have been happy to use if employees had remained in the scheme.
    • chrisedwards
    • By chrisedwards 31st Mar 17, 7:14 PM
    • 1 Posts
    • 0 Thanks
    chrisedwards
    Yes employer should opt for auto-enrolment and employee can also compare plans from other services providers.
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