Do I need a pension scheme for one employee who is opting out

Even if you only have one member of staff who needs to be automatically enrolled into a pension scheme, they’ll still need to be put into the scheme before they can ask to leave it ('opt out'). That is the whole ethos behind automatic enrolment.

You may be able to use postponement. Postponement allows an employer to delay assessing and therefore enrolling; an individual, some, or all of their staff into a pension scheme for up to three months. It is essentially a ‘waiting period’ during which an employer is expecting something to change about his team, for example a staff member to leave or perhaps their wages to fall/ rise. The employer must write to their staff to tell them they’re postponing automatic enrolment for them.

Once the postponement period is over, you would need to assess your member of staff and if they still meet the definition of an 'eligible worker' they will need to be automatically enrolled into a pension scheme immediately. 

Please note, a staff member also has the choice to opt in during postponement also. In 2016, only about 10% of workers opted out though so please be careful assuming your staff member might. And remember that coercing them into opting out is against the law.

Your local TaxAssist Accountant would be happy to look after the administration surrounding your pension scheme and/ or run your payroll. Please contact us if you’d like to discuss this further. 

Date published 11 Aug 2017 | Last updated 20 Sep 2022

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.