Available for the following payroll plan: Free Payroll, Core Payroll
Available for the following user access levels: Admin
Once an employee has been automatically enrolled in a pension scheme, they are entitled to opt out of the scheme during the opt-out period. For guidance on opting out from The Pension Regulator, refer to their website here.
Process a pension opt-out
Once you receive the notification of the opt-out, you can process an employee pension opt-out by following the below steps:
- Open the employee details page and select the Pension Settings option.
- Scroll to the bottom of the page and click the Opt Out of this Pension Scheme button.
- Enter the Opt-out reference that the employee has been sent. If the employee has made contributions to the pension and would like to claim a refund, then select the Yes option.
- Once you click the Set button, you will see a screen showing the opt-out reference number you have entered and the opt-out date. You have the option to edit any of these details by clicking the Edit button.
- Once you are happy with the information you have entered, you can click the Save button to save all of the information.
If a refund is due, you will receive an email/letter from the pension provider confirming the amounts due to you. To process the refund, you will need to run a Pay Run with an adjustment:
- In the Pay Run, click on the employee name that the refund refers to.
- Click the Actions button.
- Click the Adjust HMRC Values button.
- Select the type of refund payment you require.
- Fill in the amount required and add a note if needed.
- Click the Save button.
Automatic collection of pension opt-outs through PensionSync
Where a business has employee pension data submitted directly to the pension provider through PensionSync, then as part of the Pay Run creation, the opt out and cease contribution information is automatically brought back from the pension provider and updated on the employee record in payroll.
- Where an opt-out is identified, a refund will be applied in the first available Pay Run.
- Where an employee ceasing contributions is identified, contributions will cease from the effective date as confirmed by the pension provider.
PensionSync collects and holds up to six weeks of opt-out and cease contribution data.
Why has my refund not been processed?
For the automatic refund calculation to function correctly, there are some prerequisites which need to be met:
- The opt-out date needs to be within the Pay Run period.
- The employee needs to be included in this Pay Run.
If you cannot meet the requirements above, we suggest you use the HMRC Adjustment mentioned above and calculate the Employee Pension Contribution refund manually in the Pay Run.
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