Opt in or opt out of a pension scheme

Set up eligible and non-eligible employees so they can opt into your pension scheme, or opt them out from pension contributions once they have confirmed their opt out date with the pension provider.

How it works

  • Opt in – employees who are not eligible for automatic enrolment can ask to opt in to your pension scheme. If you add a non-eligible employee to your scheme, both you and the employee will contribute to the pension.
  • Opt out – eligible and non-eligible employees can opt out of a workplace pension within the 'opt out' window, if they're actively in a pension scheme. If an employee chooses to opt out of your workplace pension, they'll no longer receive pension contributions.

Add an employee to a workplace pension scheme

You can only add an employee to a pension scheme after Xero has assessed them for auto enrolment. This occurs when you post a pay run after their pension staging or postponement date.
  1. In the Payroll menu, select Employees.
  2. Click the employee's name to open their details.
  3. Click the Pension tab.
  4. Click Opt In.
  5. Select the Opt In Date.
  6. Click Save.

Make sure you write to your employee (GOV.UK website) to let them know they're in a pension scheme.

Remove an employee from a workplace pension scheme

If your employee wants to opt out of your pension scheme they must contact your pension provider directly rather than you, their employer, and should complete an opt-out notice to send back to the provider or follow the provider's online portal process.

If they don't have an electronic connection, the pension provider will contact them by letter or email and they will then let you know they have opted out, with their opt out date.

Once your employee has contacted you to let you know they have opted out and have an opt out date:

  1. In the Payroll menu, select Employees.
  2. Click the employee you want to opt out.
  3. Click the Pension tab.
  4. Click the Opt Out button.
  5. Select an Opt Out Date and Opt Out Reason.
  6. Click Save.
  7. Check if the employee is eligible for a refund.

If you have set up your payroll to file pension contributions electronically, the opt out information will be uploaded automatically into Xero in the next pay run following the employee's opt out date.

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