Auto enrolment affecting student loan

Tinkywinks108

I work for a local authority but was an employee for an outsourced company. We are now going back into the council as direct employees which will trigger auto enrolment of the local government pension scheme (I wish to opt out permanently).  We've been told that for the first month, pension will be deducted even if we opt out, and then refunded in the following month's pay. 

Is there any way we can stop this deduction as this will mean I will fall short for the month - I cannot afford this and will likely be overdrawn, accumulating bank charges.

Not only that, but If I understand correctly, the refund in the following month will trigger a higher rate of student repayment for that month. A friend of mine went through this recently - and for the month she was auto enrolled her student loan repayment was no lower. 

I have tried contacting the pension providers (West Yorkshire pension fund) but all they've done is sent me an opt out pension form to give to my employer which I've already done.

MallyGirl

Opting out of the local government pension scheme is something that your future self will curse you for. Can you really not manage without that contribution? student loan repayment takes into account pension contributions

Devongardener

Unfortunately you can’t opt out before enrolment.   If you can possibly manage it don’t opt out at all, local government pension schemes are some of the best available and you will definitely regret not being in the scheme in the future.  Also you are essentially giving up free money from your employer and tax advantages.

Dazed_and_C0nfused

(I wish to opt out permanently)

Very odd.  Assuming it's LGPS then that means you will almost certainly be paying more tax than is necessary. 

Never mind effectively taking a huge pay cut 😳

Brie

The rules on auto enrolment is that it has to happen and you have to opt out.  Otherwise people would opt out in advance.  This way many people (supposedly) will find they can manage on the slightly lower take home and not bother with opting out thus ensuring they have a pension to rely on in the (often) distant future. 

As you can't do anything about the auto enrolment my suggestion would be for you to go over to the Debt Free board and fill out a statement of accounts that is on one of the stickies.  By having a good look at what your income and expenditures are you may find a way to afford to stay in the pension scheme.  This would be good for you in the future and also remove the student loan repayment issue.  If you can't see any way savings can be made in your budget you might want to post it to the board to get some advice.  They're generally a friendly crowd who want to help people who are in debt or are simply looking for ways to tighten their belts.  Apologies if you have already done this or similar.

Pat38493

Being in that pension is probably worth more than 20% of your salary i.e. if you were in a private company, you might need to be putting more than 20% of your salary into a pension to get the same benefits you will accrue there.

Tinkywinks108

MallyGirl said:

Opting out of the local government pension scheme is something that your future self will curse you for. Can you really not manage without that contribution? student loan repayment takes into account pension contributions

I didn't think student loan would take pension contributions into account, I'm sure my friend said it didn't make a difference when she was auto enrolled in. 

Tinkywinks108

Devongardener said:

Unfortunately you can’t opt out before enrolment.   If you can possibly manage it don’t opt out at all, local government pension schemes are some of the best available and you will definitely regret not being in the scheme in the future.  Also you are essentially giving up free money from your employer and tax advantages.

It is a good scheme - something like 28% contributed by my employer. But it would work out roughly £30 per week deducted from my salary. I'm basically down to zero at the end of the month as it is. 

Tinkywinks108

Dazed_and_C0nfused said:

(I wish to opt out permanently)

Very odd.  Assuming it's LGPS then that means you will almost certainly be paying more tax than is necessary. 

Never mind effectively taking a huge pay cut 😳

It is LGPS - so I'll be paying less tax if I opt in? 

Tinkywinks108

Brie said:

The rules on auto enrolment is that it has to happen and you have to opt out.  Otherwise people would opt out in advance.  This way many people (supposedly) will find they can manage on the slightly lower take home and not bother with opting out thus ensuring they have a pension to rely on in the (often) distant future. 

As you can't do anything about the auto enrolment my suggestion would be for you to go over to the Debt Free board and fill out a statement of accounts that is on one of the stickies.  By having a good look at what your income and expenditures are you may find a way to afford to stay in the pension scheme.  This would be good for you in the future and also remove the student loan repayment issue.  If you can't see any way savings can be made in your budget you might want to post it to the board to get some advice.  They're generally a friendly crowd who want to help people who are in debt or are simply looking for ways to tighten their belts.  Apologies if you have already done this or similar.

I am 50 years old so it's not as if it's too far into the future! Thank you for suggestions. I have done all the MSE makeovers and have saved money doing this. It's ever since the cost of living crisis - it's making things so unmanageable financially. 

Tinkywinks108

Thanks for your replies all - I am going to have a serious re-think about opting out.
It's telling that the replies so far are all championing the LGPS - so I am going to reconsider my decision. 
And I think I'm being underpaid actually and in the process of sorting this out - which means my monthly budget would be higher than it currently is.