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UK&IR - Payroll - Processing an Auto Enrolment Pension Opt-Out and Manually refunding Pension Contributions - Payroll

An employee has opted out of the Auto Enrolment Pension, they have been marked as having left the pension but the pension deduction starts again a few periods later, their pension contributions will also need to be refunded.

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Written by Denisa Badarau
Updated over a month ago

This is normally caused by the pension opt-out not being processed correctly

To opt out an employee out of the pension, you need to add a WEOO Notification to the employee notices by following the steps below:

  1. Go to Payroll

  2. Click Weekly Payroll

  3. Select Employee Maintenance

  4. Select the employee record

  5. Click Other Tab

  6. Select Employee Notifications

  7. Add a new notification

  8. Type: WEOO-Opt Out of Pension Scheme

  9. Enter the information regarding the opt-out.

    Due: Date when the change is due to take place

    Sent / Received: Date that the employer was notified that the employee wants to opt out of the pension

    Acknowledged: Date that the employer acknowledged the opt-out request

    Pension Scheme: Pension Scheme Number

    Assessment: Valid

    Refund Status: Worked Out by COINS

  10. Save the record

  11. Calculate the payroll

  12. Open the calculation report, and there will be a warning for the employee who has opted out.

  13. Here, it shows that no refund will be given; this means that a manual refund will need to be processed.

  14. Reset the payroll

  15. Check which pay items are responsible for the Ee’s or Er’s Pension contribution.

  16. This can be found in the Company Configuration: Payroll > Global Setup > Company Configuration

  17. On the Significant Item Numbers Tab. In this case the pension contributions are controlled by Pay Items 559 & 560

  18. The manual refund can now be processed. This is done via the employee’s sequence items: Payroll > Weekly Payroll > Employee Maintenance, select the employee and go to the sequence Items tab

  19. Filter to pay items 557, 558, 559, 560

  20. Open the line for pay item 559 (Ee Pension)

  21. Tick the override check box and enter a negative value for the amount you wish to refund in the Std Amount box

  22. Save the line and repeat the same for pay item 560.

  23. Recalculate the pay

  24. Check the employee’s payslip

  25. The employee has been refunded the Ee Pension contribution and the Er Pension Liability has been reduced.

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