You can ask your employer if they’re able to organise for you to reduce your contributions instead, to below the minimum contribution levels. When you’re auto enrolled into a pension scheme, by law there are set minimum contribution levels.
Remember – it should be your choice to pay below the minimum levels. Your employer is legally not allowed to suggest, encourage or induce you to do so.
Reducing your pension contributions means:
- your contribution could be reduced, but only if you decide this is what you want.
- you’ll no longer be classed as ‘eligible’ for auto-enrolment, so the amount you’d like to pay should be discussed with your employer.
- your employer would no longer have a legal obligation to pay anything into your pension pot. So you risk losing ‘free’ money from them.
- your employer may need to re-enrol you into the pension scheme every 3 years (sometimes sooner). You’ll have the opportunity again to see if you’d like to contribute to meet the total legal minimum contributions.
- you’ll still receive tax relief from the government (if you’re entitled to).
While it’s your decision to pay below the minimum legal contribution levels, your employer may not be able to facilitate this through their payroll. Speak to your employer first to see if they can help with this.
If your employer can’t help you reduce your contributions
Then you could instead choose to make payments directly into your pension pot by Direct Debit. Visit our website for more information on how to set this up.
Your pension savings are separate from the State Pension. This is currently at £134.25 a week, so it’s likely you’ll need to top it up to enjoy a comfortable retirement.
You can decide to opt back into the pension scheme and pay towards the legal total minimum contributions at any point in the future. You won’t need to wait until you’re re-enrolled by your employer. You’ll just need to let your employer know in writing. This can be a signed letter or email, if it includes a statement to say it has come from you.
Remember, if you reduce your own contributions your employer will no longer have to continue contributing to your pension pot, although they can choose to. Also, as you wouldn’t be paying in as much, you wouldn’t receive as much tax relief from the government on your contributions.