Company charging me for opting out of auto enrolement pension

A question about : Company charging me for opting out of auto enrolement pension

Hi I hope someone can help, I have recently joined a new company and have decided to opt out of the pensio scheme as I am only on a 12month contract currently. I have now found out via my wage slip that I have been charged to opt out is this legal. I opted out of my last companies scheme and was not charged. This is what it states on my compines intranet site
Opting out - Why will I forfeit?

To comply with the new legislation and to support employees to save for their future, ******** has a contribution structure for all employees that encourages saving for retirement and minimises the number of opt outs.
Reducing the level of flexibility around pension funding ensures that ******** is compliant with the legislation, by preventing the company being perceived to ‘induce’ employees to opt out, therefore any employee opting out of the pension will forfeit the 1% employer contribution to pension on a monthly basis.

Best answers:

• First question: why on earth would you refuse extra money from your employer, even if it is on a short term contract????
  Second question: Does your wage slip actually show a deduction of pay? Because the section from, I presume, your company handbook only says that you forfeit the employers contribution if you're not in the pension scheme. Which is fairly obvious.
  Just a point to note, that 1% extra pay from your employer that you are saying no to, will eventually become a minimum of 3% - a substantial amount of free money to say no to.
• Yes my wage slip does have a deduction of pay
  Pension opt our - ER
• I don't understand why you say this is extra money as it comes out of my wage, I know they will give money to my pension pot as long as I am doing. This is my choice and at the moment I need all the money for other things.
• OK, so this is what has likely happened. This is your first payslip, yes? The law says that every employee MUST be opted in to the scheme automatically as soon as they become employed. The employer is required to opt you in and make the minimum deduction from your wage (currently it's 1%) and pay it into the pension scheme along with their own contribution (again, currently 1%). This is the law, regardless of whether you say from day one that you want to opt out, the company MUST opt you in. Ridiculous rule I agree, but it's the rule nontheless.
  Anyway, now you are allowed to opt out, so the company must remove you from the pension scheme and refund you the deduction made from your first payslip. You'll receive this back in your next pay.
  BUT, bear in mind that once a year the company is obliged to opt you back in, regardless. You then have to opt out again. They also have to opt you back in when there is a change to your pay i.e. wage increase / shift pattern change etc etc.
  Yes, it's annoying. But they have purposely made it so to discourage people from opting out. We all need to save for our future.
  It IS extra money, you just won't see it until you draw your pension. What you are seeing is your own contribution coming out of your pay. 1% is such a tiny proportion - does it really make sense for you to opt out?
• This is there to discourage you from opting out. The regular takes a very dim view if employees opt out and when there's a high number of employees opting out they will go in to interview the employer and employees causing a lot of time wasted and hassle. This is because many employers (to save themselves money) will encourage/force their employees to opt out of the scheme.
  Therefore, in their defence, they can now say they have a penalty in place for opting out. You can still opt out though. I don't know the legalities on this but you are not the first I've come across.
  Why would you refuse to join? It makes no sense. It won't even cost you as much as you think to join because of tax and NI. It is for your benefit. This is why auto-enrolment was introduced.
• No this is not my first wage slip and they have charged me again this month. I opted out and have been told I have to pay a penalty every month which is around Ј30, it doesn't seem a lot to some people but it is Ј360 a year that is going somewhere.
  The minimum contribution is Ј80 a month and as I said I need all the money at the moment as I have moved house. I understand everybodies points of view but this is my money I have worked for and should be entitled too.
  I want to know if this legal for them to do as I have never heard of it before?
• If you actually have it in writing from them that they are penalizing you for opting out, then you need to take this further. They are not allowed to do that.
• Thanks should I contact the pensions regulator then
• right can I break this down
  On my wage slip it says
  Јxxxx then there is a deduction Pension opt our - ER of Ј30
  Making my wage now Ј30 less a month that is not free money that is taking it off me when a salary was agreed, that is not correct?
• I wonder whether their payroll system made it easier to add 1% to your gross pay then deduct that addition for those who opted out. Worth checking that the pay on your payslip matches the agreed pay or whether it's higher. If they did do that, deducting 1% would be deducting too much. This is because 100 + 1% = 101 while 101 - 1% = 99.99.
  So far as I'm aware there is nothing in law that prevents an employer from offering employees more money if they opt in to a pension scheme or don't opt out.
• No the monthly amount is my annual wage divided by 12 so I know I am Ј30.08 down a month
• You need to speak to whoever runs the payroll and get them to clarify exactly what they are doing. All we can do here is tell you that they shouldn't be penalising you for opting out.
  Go to Payroll and ask them to explain what the deduction is.
• Ј30.08 is a pretty exact figure so its not a flat admin fee, its obviously a percentage of something. Without knowing your gross (which I understand if you were reluctant to disclose) its hard to work it out but I am wondering if this is related to a salary sacrifice system and recovering the employers NI saving that they lose by you opting out.
• Thanks everyone, I have emailed legal and general who run the scheme to see if they know, I have contacted HR here but its a central number and it takes a long time to get anything sorted but I have found a penions email address but she is off until next week so I will let you know how I go on
• I also found this
  If you choose to opt out, you will forfeit the minimum amount of employer pension funding (1% of Qualifying Earnings in 2013).
  E.g.
  If your qualifying earnings are Ј20,000pa, opting out would incur a cost of Ј12 a month.
  If your qualifying earnings are Ј40,000pa, opting out would incur a cost of Ј29 a month.
• Presumably with the way the system works your first payslip would have had a pension deduction on it. Are there any other differences in the amounts shown on it - i.e. is the gross on that first payslip shown as a lower amount?
• No on both wage slips it is the same
• No I opted out before my first wage came in