City Trustees - part of Mattioli Woods



News and Media

18 December 2014

Pensions Perspective: I have enhanced protection. How can I make sure that I am not auto-enrolled in my company pension scheme when it stages in March 2015?

The short answer is that you cannot stop being opted in, but you can make sure that you opt out of the pension scheme within the opt-out period in order to retain your enhanced protection status. This also applies to anyone with fixed protection.

Protection status will be lost if a pension contribution is paid to any pension plan and this includes a pension contribution made when an employee is auto-enrolled.

If you are eligible on the date of assessment then you have to be opted in. It is illegal for an employer to encourage an employee to opt out. However, you will have one calendar month during which you can opt out and get a full refund of any contributions. This is called the opt-out period and it starts from the later of:

  • The date active membership was achieved
  • The date you receive the provider's letter with the enrolment information

Provided that you opt out within the opt-out period, you will be deemed as never having joined.

You can opt out at any time, but if this is after the opt-out window has expired then you will be treated as having membership for the period in which contributions were made, and any protection status you had will be lost.

There is also a requirement to notify when a protection status is lost and there can be financial penalties if the notification is delayed. HM Revenue & Customs will find out - maybe not straight away, but eventually, and that small auto-enrolment pot will crystallise!

On December 1 2014, the DWP published a consultation setting out a number of changes to legislation covering auto-enrolment, which included an exception to be granted to people with enhanced or fixed protection. Responses to the draft proposals are expected in January with proposed legislative changes coming into effect from April 2015.

Whilst we will keep our IFA connections informed of the changes, it is unlikely these will be in place for March 2015, so make sure your payroll department has your current address, and keep an eye out for the enrolment information and/or deductions from your payslip.

 

Pension Perspective is a weekly feature from City Trustees, covering questions that our experienced sales and technical teams have received from advisers. The Q&A covers a range of subjects including property, pension contributions, protection, auto-enrolment and more.

City Trustees operates a free technical helpline for advisers for support with pension challenges. Tel: 0116 240 8731 or email: technicalhelp@citytrustees.co.uk.

This article has now been updated

 

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