What happens if a worker misses the one-month deadline to opt out of pensions auto-enrolment?

What happens if a worker misses the one-month deadline to opt out of auto-enrolment will depend on the rules of the pension scheme that the employer is using for auto-enrolment. The Pensions Act 2008 provides only that a refund of employer and employee contributions must be given if the employee asks to opt out within the one-month opt-out window. The employer's notice to the eligible jobholder informing him or her that he or she has been auto-enrolled must state the latest date that he or she can opt out.

When an employer receives an opt-out notice it must check that it is valid. The jobholder should have used the opt-out notice provided to him or her by the scheme, which must include specified information for the jobholder in a section titled "What you need to know". The jobholder must have provided his or her name and either date of birth or national insurance number, the employer's name, the date the form was completed and a signature (or if sent by email, confirmation that the jobholder submitted the form). The form must also include a statement to the effect that the jobholder wishes to opt out of pension saving and understands that, in so doing, he or she will lose the right to pension contributions from the employer and may have a lower income on retirement. If the form has been incorrectly completed the employer must inform the jobholder of this; in these circumstances the one-month opt-out period is extended to six weeks.

If the worker misses the deadline to opt out, the rules of the pension scheme might provide that a refund can be given (this may depend on the reason for the late arrival of the form) but there is no duty to provide a refund under the Pensions Act 2008.

Employers choosing to use the National Employment Savings Trust (Nest) should be aware that the scheme will not provide a refund after the one-month opt-out date.

In all cases, entitled workers who opt out after voluntarily asking to join a registered pension scheme are not entitled to a refund unless the scheme rules provide for one.