Pensions have been a common staff perk for many years. It has allowed employees, not only from large employers, but also smaller employers to start contributing to their pensions early on in their career journey.
However, since the change in the Pensions Act back in 2008, the law made it compulsory and a legal requirement for employers to help their employees save for their retirement by automatically enrolling workers into a pension scheme, and contributing towards it. This is known as Auto-Enrolment.
Auto-enrolment is referred to the process of automatically enrolling staff members on a payroll, into a pension scheme. This of which applies to all businesses within the UK who employ at least one member of staff.
Gov.uk states “The Act contains a number of amendments to the Pensions Act 2008 in relation to automatic enrolment into workplace pension schemes. These are designed to address technical issues and clarify existing powers ahead of the next major staging milestone for automatic enrolment in spring 2014.”
Opting-In & Out
The sole purpose of the auto-enrolment scheme is that employees who meet the specified criteria are automatically enrolled into the pension scheme. This does not necessarily mean that you cannot opt-out of the scheme at any given time.
Unless you opt-out of the scheme within a month of joining, you cannot get a refund of any money that you have paid into a pension scheme previously. This does not mean that you will lose funds however, you just won’t be able to access those funds until you reach the age of retirement.
Who won’t be automatically enrolled?
In some situations, your employer may not have to enrol you automatically, depending on whether or not you meet the criteria.
You will not be automatically enrolled if:
1.You have given notice to your current employer that you are leaving your job, or vice versa.
2. You have already agreed to a pension scheme previously with your employer.
3. You are in a limited liability partnership.
4. You are from another European Union member state and are already in an EU cross-border pension scheme.
How does auto-enrolment affect an employee?
As an employee, auto-enrolment can only affect you if you have more than one job. Moreover, every job is treated differently and therefore separate for automatic enrolment purposes.
If you have more than one employer, you can choose whether you want to opt-out for one. You can pay into more than one pension scheme if that is what you want to do.
Don’t be afraid to opt-out of a pension scheme. If you are facing financial difficulties and would prefer to take the whole sum of money from your employer, then that can be done. At MCL Payroll, we can help you identify what will work best for you, and help lead you in the right direction with your pension scheme.
Get in contact with us today by calling us on 01255 258316 or sending us an email at email@example.com
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