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Auto Enrolment refund

Faith177
Faith177 Posts: 2,927 Forumite
First Anniversary First Post
in Auto-enrolment
Hi

I'm not sure if anyone can help me but I'm a little confused

My company put me into our pension scheme on June 1st and sent me the option to opt out in July so I ended up making 2 payments of £51

They have advised me I'll be getting my refund this week for this but it is only £69.36 due to the tax. I understand that the tax is due but £32.64 seems very high considering the amounts involved can anyone tell me if this is correct or how I can work it out.

It more than likely is right but I am bit annoyed that I was forced into something I didn't want to be in, in the first place (this was the second time I've had to opt out due to how long i've been with my company) it's taken them ages to get me out of it and now I've been hit hard with the tax :(
First Date 08/11/2008, Moved In Together 01/06/2009, Engaged 01/01/10, Wedding Day 27/04/2013, Baby Moshie due 29/06/2019 :T

Comments

  • BelindaDido
    BelindaDido Posts: 28 Forumite
    First Anniversary Combo Breaker
    As far as I am aware, your pension contribution would have deducted from your salary before both tax and national insurance contributions were calculated - they would be calculated on your 'net' salary. If you decide to opt out, then the £102 will be refunded but will then be subject to both tax (e.g. 20%) and NI (e.g. 12%).

    You will be opted back in again in 3 years' time: "Your employer is also obliged to automatically enrol you back in to a pension every three years. You can opt out again if you still don’t think it’s for you."

    This is my understanding of the situation, but I'm happy for any of the financial experts/professionals to correct me or add additional information.
  • Paul_Herring
    Paul_Herring Posts: 7,481 Forumite
    Name Dropper Photogenic First Post First Anniversary
    BelindaDido wrote: »
    [...]£102 will be refunded but will then be subject to both tax (e.g. 20%) and NI (e.g. 12%).

    [...]

    This is my understanding of the situation, but I'm happy for any of the financial experts/professionals to correct me or add additional information.

    Presuming basic rate taxpayer, that's exactly what it will be.
    Conjugating the verb 'to be":
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  • neilvw
    neilvw Posts: 462 Forumite
    If there was NI relief then this must have been a salary sacrifice arrangement, right?
  • Kynthia
    Kynthia Posts: 5,666 Forumite
    First Post First Anniversary Combo Breaker
    You aren't being 'hit hard with the tax' you are paying the tax you would have paid on that money had it not bypassed that by going into the pension. You should be getting the same money in your take home pay you would have got if you hadn't been enrolled in the pension.

    The tax benefits are one of the main benefits to pensions, and any employer contributions are another. So you end up with a lot more money in your Pension than you lost in your take - home pay.

    Your employer is unlikely to be happy at going through the massive exercise to auto enroll every employee into the pension scheme and then go through all the work of processing their opt out and refund either. It's a government initiative to strongly encourage people to save for their pension, so it's not worth being annoyed at them.
    Don't listen to me, I'm no expert!
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