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Opting in to a workplace pension scheme

3rd Aug 2016

You don’t need to enrol every employee into your workplace pension scheme.

Only eligible employees have to be enrolled. But as part of your duties you’ll have to write to the staff who aren’t eligible for automatic enrolment and tell them about their right to opt in, or join, your pension scheme.

Opting in by a non-eligible job holder

Non-eligible jobholders (anyone earning over £5,824 and up to £10,000) can ask to opt in to your scheme and if they do, you’ll need to make contributions.

Opting in (joining) by an entitled worker

You don’t need to enrol an entitled worker (earning less than £5,824) but these employees can ask to join the scheme.

You won’t have to make any contributions to the scheme.

How employees opt in

The process of opting in will vary depending on which pension provider you’re using. The communication you send out to your employees will outline the opt-in process. Sometimes an employee will have to ask the pension provider for a form. But in many cases a signed letter sent by your employee to you will be enough.

Employees can also request to join via email but this email must include a statement confirming that the employee has personally submitted the notice.

What to do if you receive an opt-in notice

You’ll need to assess the employee to decide wither they qualify as a non-eligible jobholder or an entitled worker. Carry out the assessment on the first day of the next pay reference period, after you receive the opt-in notice. This will be your enrolment date.

If you receive an opt-in notice part way through the pay reference period you’ll need to assess the worker on the first day of the next pay reference period.

The pay reference period is the frequency with which you pay your employees – weekly, monthly or every four weeks

a) Non-eligible jobholder

If you’ve assessed an employee as being a non-eligible jobholder then you’ll need to either:

  • Enrol the jobholder within six weeks of the enrolment date by following the automatic enrolment process
  • If you don’t have a scheme in place you’ll need to set one up within six weeks of the enrolment date and enrol your employee.

b) Entitled worker

You have six weeks from the enrolment date to set up a scheme but it doesn’t have to be an auto enrolment qualifying scheme as long as it’s a tax-registered scheme.

You’ll need to keep records relating to the scheme and your employees who are members of this scheme, such as opt-in notice.

Detailed guidance from TPR Opting in, joining and contractual enrolment

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