Existing scheme members who want to pay less than the minimum contribution requirement

These FAQs are for financial advisers only. They mustn’t be distributed to, or relied on by, customers. They are based on our understanding of legislation at the date of publication.

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Many employers and their employees will already be making contributions to a money purchase pension scheme which was set up before the employer reached its staging date. Under some of those schemes, the existing contribution levels will have to be increased at some point before 6 April 2019 (the point at which phasing in of the full minimum contribution requirement ends) so that the scheme continues to be a qualifying scheme in relation to a jobholder. However, eligible jobholders who are existing members may not want to pay a higher level of contribution.

If an eligible jobholder doesn’t want to pay contributions at the increased level, they can ask the employer to allow them to continue in the scheme on the lower contribution amount. Any additional contributions that had been deducted would not be refunded. The scheme would no longer be qualifying in relation to the jobholder from the date that the lower contribution rate applied.

If at the next cyclical re-enrolment date the scheme is still not a qualifying scheme in respect of the jobholder and the jobholder is classed as an eligible jobholder at the re-enrolment date, the employer may have re-enrolment duties:

  • If the eligible jobholder reduced their contribution below the minimum contribution required more than 12 months before the re-enrolment date, the employer must re-enrol them into a qualifying scheme (i.e. contributions must be increased to meet the minimum requirements).
  • If the eligible jobholder reduced their contribution below the minimum contribution required within the 12 months immediately before the re-enrolment date, the employer can automatically re-enrol them into a qualifying scheme if they want, but they don’t have to. Re-enrolling them would mean contributions would have to be increased to meet the minimum requirements.

Cyclical re-enrolment takes place roughly every three years after staging. At the cyclical re-enrolment date, the jobholder could decide to remain in the scheme and pay the additional contribution. Alternatively, they may decide that they don’t want to pay the increase, but want to stay in the scheme paying the same contribution as before. If they want to do this they should speak to their employer to arrange it, instead of opting out. If they opt out, all contributions will stop and active membership of the scheme will cease.

If the jobholder stays in the scheme but paying contributions that are less than the minimum required, they may have to be assessed and potentially re-enrolled again at the next cyclical re-enrolment date.

Note: There are exceptions that apply to some jobholders, meaning that the employer may not need to auto re-enrol them. You can find out more about this in the Pensions Regulator's detailed guidance on Automatic Re-enrolment

If the minimum contribution requirement for money purchase schemes rises above the contribution level that applies for an existing scheme member who is a non-eligible jobholder, the scheme would no longer be a qualifying scheme in relation to them. The non-eligible jobholder would then have the right to opt in to an automatic enrolment scheme.

It would make sense for the employer to record a separate section or category of member within a scheme which holds the details of these members for whom the scheme is not qualifying at any time, and keep this up to date as relevant events occur.

From 6 April 2019, contribution levels must have reached at least the full minimum requirement – 8% of qualifying earnings (minimum 3% employer contribution) or any of the alternative quality requirements.

Pensions Technical Services