Auto enrolment pension

[GOODCAT]

My husband started a new job last November. He was given some paperwork to complete to allow deductions for his auto enrolment pension to be taken from his bank account. He has not filled it in so no deductions have been made.

I knew he was reluctant to do so because it came after a gap in work due to redundancy so he was worried about money. He finds getting his new employer to talk to him very difficult.

I know he needs to complete the forms now. However he is worried about having a large amount come out at once as he hasn't opted out either. It isn't a large amount in real terms but feels like it to him.

I wondered if anyone knew

(A) whether employers are able to take this approach to auto enrolment i.e. have employees to take pro active steps to make contributions rather than have the deductions come out first. I know on a practical level he just needs to fill in the forms so this is just curiosity on my part.

(B) Does anyone have any experience of what happens if an employee delays in this way whether the money comes out in one hit (I doubt his employer would communicate with him over this). He hates his job but is near retirement age and this is the best paying job he can get.

This is not the way it is supposed to happen

Auto enrolment is meant to be the complete opposite in that you are automatically enrolled into the scheme unless you inform them otherwise. The deductions are meant to come out of your wages at source (before tax & NI).

Not an expert but administer our small firms scheme. All schemes I looked at the employer deducts staff payments at source and are responsible for paying them over. If you are late enrolling an employee an employer must make up overdue employer contributions but must give staff the choice of whether to make up contributions or not. It depends what the actual issue is I guess. Do the contributions show on Dh payslip? They should.

He can if he chooses make additional contributions but again they would usually be deducted at source unless he was investing a lump sum in which case he would need to fill in a self assessment to get the tax relief.

I take it he is an “eligible worker”

This doesn’t make any sense, why would the pension money come out of his bank account? It gets deducted from pay so the actual pay you receive has had your
contribution taken off

Thanks nothing comes out of his pay at source and nothing shows on his payslips. I thought it would do so but he has been given paperwork for it to come out of his bank account. His friend started at the same place at the same time but he filled in his paperwork and it is coming out of his account. It was his friend who pointed this out to him.

However I think it makes a mockery of auto enrolment if the employee has to take active steps. I know though he should just have signed it but I also know why he was worried about doing so at that particular time.

Assuming the employer has passed their staging date they are not compliant & could be in trouble.

He was given some paperwork to complete to allow deductions for his auto enrolment pension to be taken from his bank account.

He must have been given more than that, he must have been given an explanation of how the scheme operates. Ask for the rules and regs.
I would expect the money to come out of wages, not direct from his bank account.
Don't forget that if DH is paying into the scheme then the employer must too. DH is missing out on this extra money at the moment.

I’ve just checked on the pensions regulator site & contributions must be deducted from an employees salary.

You can set up a waiting period (think it’s a maximum 3 months) we use this period for temporary staff (mostly students working in the summer holidays) & whilst new staff are on probation but employees have the right to join the scheme early if they wish.

Thank you that is really helpful to know. It felt wrong and I will ask him to talk to his employer. If they are not helpful we will call the pension regulator.

My husband asked to speak to the manager at the end of January when they finished their probation period and they have just been fobbed off and still cannot speak to him.

They are really wary of being laid off though having been made redundant before. They are both looking for other work as the employer hasn't been great but are struggling too find anything that pays as well. My husband is earning a lot less than before and we cannot afford for him to take another paycut until we are back on track after him being out of work.

Thanks AlexanderHamilton I got in touch with the pension regulator. They said it should be deducted at source and that his employer and he would need to make the contributions from when he started. They said to speak to his employer which I will ask him to do.

This all sounds wrong, so do investigate it further.

Employee pension contribution is deducted by the employer form salary, in a similar way to how Income Tax and National Insurance are deducted.
Employer pension contribution is paid by the employer, in addition to the salary, in a similar way to how Employers NI is paid.
At no point does the pension provider need to know the employees bank details. The only purpose of having that information is for the employee to make additional contributions.

Find out more... see if the scheme enrolment was delayed by the maximum three month period.

Just seen your update. Yep, as the regulator says, he should have been opted-in automatically from the start (assuming he earns over the threshold). If he wants the pension but not want to pay in quite as much, then to reduce the amount that goes to pension, qualifying earnings can be used to calculate the employee and employer contributions... that will lower the payments but it will lower if for both him and the employer.
This is quite a good explanation of Qualifying Earnings: www.nestpensions.org.uk/schemeweb/NestWeb/public/helpcentre/contents/how-do-i-calculate-contributions-if-i-m-using-qualifying-earnings.html

Nannynick thanks that link is helpful. I will double check his earnings for that employer for 2017/18 when I get back home. He may be under the threshold.

Is he part time? You would have to be earning very little to be under the threshold. It’s pro rata for those who started part way through a tax year.