Auto enrolment and 'opt down'

dharm999 · 12 April 2018 at 7:34PM

After some advice please. Company I work for uses Nest to comply with auto-enrolment. Contributions have now increased to 3% and 2% for employee and employer, respectively. However some employees want to remain at 1% contribution, so opting down from the 3% contribution. The confusion arises around what contribution the employer should make if the employee opts down to 1%. I have seen conflicting info, and there was a recent article on the BBC website, that said in this scenario, the employer was under no legal obligation to pay 1% as the employee had opted out of a qualifying scheme. The terminology confuses me, and this doesn't seem right, does anyone know what the actual law is for this situation?

Thanks

Brynsam · 12 April 2018 at 8:01PM

Usually none. From the Pensions Regulator's website:

'If a member does not wish to pay the increased contributions due in April 2018 and 2019 the scheme rules or terms and conditions may allow them to remain at the lower contribution rate, or to reduce their contributions again after the increase.

This will mean they continue to be a member of the scheme, but as contributions are below the minimum level required by law, the scheme will not be qualifying for them.

Depending on the scheme, the member may no longer receive employer contributions. '

Unless your contract of employment entitles you to receive contributions, the employer doesn't have to contribute to NEST on your behalf.

Dox · 12 April 2018 at 8:44PM

Unless you belong to a scheme which gives members the option of contributing less than the minimum employee contribution rate AND the employer 'tops up' the extra on your behalf (this would normally be a scheme set up by an employer specifically for their own employees), you will lose the right to an employer contribution unless (as the post above points out) your terms of employment give you the right to one.

You say it doesn't seem right, which is understandable - but if employees could unilaterally decide to stay at 1%, many who could easily afford the increase to 3% would doubtless choose to do so, thus undermining the whole concept of 'phasing in' auto enrolment contribution rates.

Auto enrolment and 'opt down'

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