How do staff ‘opt out’ or leave the scheme?
Any member of staff has the right to leave your qualifying workplace pension scheme at any time and for any reason. If they have been automatically enrolled into the scheme they can ‘opt out’ of it, but must do so during the month-long ‘opt-out period’ that follows their initial automatic enrolment. If they leave the scheme after this they are deemed to have ‘ceased active membership’.
Every member of staff is assessed by their age and earnings, the outcome being that they fall into one of three categories, either qualifying for automatic enrolment into your QWPS, having the right to opt in to it or having the right to join a pension scheme.
If they qualify for auto enrolment they have no choice – legally, you must enrol them into your QWPS. However, if they decide that they don’t want to be a member of your QWPS, they will have to consciously, and officially, ‘opt out’ of it. The key principle of ‘automatic enrolment’ is as its name suggests: if someone qualifies for auto enrolment they are automatically enrolled – joining isn’t optional, the person doesn’t have the choice.
Having been automatically enrolled into the scheme, an employee who wants to leave your QWPS has one calendar month to ‘opt out’ if they want to receive a full refund of any contribution they may have made. This one-month period is known as the ‘opt-out period’ and, during this time, the person must give their employer a valid ‘opt-out notice’ which they receive from the QWPS provider. To be valid, the opt-out notice must be completed and a series of statements and warning declarations signed. It’s illegal to try to influence staff to opt out of a QWPS, ie to provoke the situation whereby not having any members in your QWPS, you don’t have to do anything including make any contributions.
Staff can still leave the scheme after the opt-out period has finished, for example they may leave your employment. If this is the case, they are deemed to ‘cease active membership’; doing so will follow the procedure agreed with the pension provider when the scheme was first set up.
Any one leaving the scheme, either by opting out or ceasing active membership, has the right to rejoin the scheme if they change their mind – and every three years you must automatically re-enrol any member of your staff who opted out of the scheme.
How can One Financial Solutions help you?
One Financial Solutions is here to help you. We can help you plan and implement everything necessary to ensure you comply with the new legislation and fulfil your legal obligations.
If you already have a workplace pension scheme we’ll review it to make sure it can be used and will recommend any changes that may be needed. If you need a new scheme we’ll find one for you and, as a truly independent firm of financial advisers, we’ll make sure the scheme we recommend is selected from the entire market and is the one that is best for both you and your staff.
More than that, if you’d like us to administer the entire scheme for you, we can do that too.
So, if you’re looking for specific help about auto enrolment or just want advice on the subject, please call us on 020 3714 9565 or ask us to call you by sending an email to firstname.lastname@example.org.