Company charging me for opting out of auto enrolement pension

jamesd

I wonder whether their payroll system made it easier to add 1% to your gross pay then deduct that addition for those who opted out. Worth checking that the pay on your payslip matches the agreed pay or whether it's higher. If they did do that, deducting 1% would be deducting too much. This is because 100 + 1% = 101 while 101 - 1% = 99.99.

So far as I'm aware there is nothing in law that prevents an employer from offering employees more money if they opt in to a pension scheme or don't opt out.

nicola261180

No the monthly amount is my annual wage divided by 12 so I know I am £30.08 down a month

*~Zephyr~*

You need to speak to whoever runs the payroll and get them to clarify exactly what they are doing. All we can do here is tell you that they shouldn't be penalising you for opting out.

Go to Payroll and ask them to explain what the deduction is.

WestonDave

£30.08 is a pretty exact figure so its not a flat admin fee, its obviously a percentage of something. Without knowing your gross (which I understand if you were reluctant to disclose) its hard to work it out but I am wondering if this is related to a salary sacrifice system and recovering the employers NI saving that they lose by you opting out.

nicola261180

Thanks everyone, I have emailed legal and general who run the scheme to see if they know, I have contacted HR here but its a central number and it takes a long time to get anything sorted but I have found a penions email address but she is off until next week so I will let you know how I go on

nicola261180

I also found this

If you choose to opt out, you will forfeit the minimum amount of employer pension funding (1% of Qualifying Earnings in 2013).
E.g.
If your qualifying earnings are £20,000pa, opting out would incur a cost of £12 a month.
If your qualifying earnings are £40,000pa, opting out would incur a cost of £29 a month.

WestonDave

Presumably with the way the system works your first payslip would have had a pension deduction on it. Are there any other differences in the amounts shown on it - i.e. is the gross on that first payslip shown as a lower amount?

nicola261180

No on both wage slips it is the same

nicola261180

No I opted out before my first wage came in

WestonDave

Firstly you shouldn't be able to opt out before you have been "auto enrolled" which in turn means the first pension contribution (at least!) must be taken from your salary. You should then get details from the pension provider (in this case L&G) on how to opt out, at which point you contact L&G, opt out and they tell your employer to stop taking pension contributions (and refund what has been taken).


So hypothetically if your salary is around £42k per year, and the employer runs a salary sacrifice scheme, you can opt out of the SS scheme, but would then have to be auto enrolled. That would lead to a 1% deduction on the qualifying amount which would be about your £30.08 figure. You'd get that back if you opt out with L&G but you shouldn't be able to do that with your employer - it has to be with the provider.