Company charging me for opting out of auto enrolement pension

jamesd

It may be a payroll misunderstanding. The employer has by law to put in 1% for those who are opted in. But for some reason payroll also seems to be deducting 1% from your pay as well as the 1% employer part that you forfeit.

nicola261180

I was here 3 weeks when I got my letter from legal and general I immediatley opted out my first wage then came 3 weeks after this and all it said was as before pension opt out - ER £30.08

jamesd

WestonDave wrote: »

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.

It is entirely possible to enrol someone and have them opt out before their first pay is affected. All that is required is creating an active membership (pages 16 onwards) and that does not require paying anything. the ideal time is just after the payroll date so the employee has almost a full pay cycle to receive the opt out information and opt out before anything is deducted from pay.

*~Zephyr~*

It may be that the advertised salary / your agreed salary was inclusive of the 1% employers contribution to pension. Because you have opted out of the pension scheme, they are taking back that 1%, which would explain the deduction.

E.g. WITH the pension scheme, you're paid £12,000 per year, £120 of which is made up of employers pension contributions.
Therefore, WITHOUT the pension scheme, you are deducted £120 making your salary £11,880.

Did you have an offer letter when you were offered the job? It should be explained in there is this is in fact the case.

There's nothing to say the employer cannot do that, but it does beg the question of what they will do as the employer conts increase. Keep cutting everyone's wages?

jamesd

If it was inclusive they are deducting too much. Taking 1% from the whole is deducting more than adding 1% to the original amount.

*~Zephyr~*

I'm not saying that their maths isn't flawed, I'm just trying to explain why the OP might be seeing a deduction on her payslip.

And we can't say if £30.08 is wrong because the OP hasn't disclosed her salary.

nicola261180

My salary is £35000 basic and then I have a benefits fund of £6272 which we can use for more holidays, health cover etc or we can take as salary which is what I have done

pelirocco

*~Zephyr~* wrote: »

OK, so this is what has likely happened. This is your first payslip, yes? The law says that every employee MUST be opted in to the scheme automatically as soon as they become employed. The employer is required to opt you in and make the minimum deduction from your wage (currently it's 1%) and pay it into the pension scheme along with their own contribution (again, currently 1%). This is the law, regardless of whether you say from day one that you want to opt out, the company MUST opt you in. Ridiculous rule I agree, but it's the rule nontheless.

Anyway, now you are allowed to opt out, so the company must remove you from the pension scheme and refund you the deduction made from your first payslip. You'll receive this back in your next pay.

BUT, bear in mind that once a year the company is obliged to opt you back in, regardless. You then have to opt out again. They also have to opt you back in when there is a change to your pay i.e. wage increase / shift pattern change etc etc.

Yes, it's annoying. But they have purposely made it so to discourage people from opting out. We all need to save for our future.

It IS extra money, you just won't see it until you draw your pension. What you are seeing is your own contribution coming out of your pay. 1% is such a tiny proportion - does it really make sense for you to opt out?

The automatic opt in is after 3 years not 1

*~Zephyr~*

nicola261180 wrote: »

My salary is £35000 basic and then I have a benefits fund of £6272 which we can use for more holidays, health cover etc or we can take as salary which is what I have done

Ah. That makes more sense. My OH used to work for RBS and had a similar set up. My Rewards or something, it was called.

I think they are doing what I said. Clawing back some of what they would be contributing.

I'm sorry to nag nicola, but as a higher rate taxpayer the 1% you would be required to put in would cost you less than £20 per month. And for that £20 you would be benefiting your pension fund by £825 every year. Are you sure you're doing the right thing by opting out?

nicola261180

I am just under the higher threshold when I checked the wage calculator on MSE

The minimum Contribution I can do is 2% and currently I need this money, if I get made permenent then I will join I just think it's naughty to take money out when none of this has been discussed with me