Date posted: 01/07/2008
Audience: This Notice will be of particular interest to:
- HR Managers and policy teams
- Payroll Managers
Action: To note the procedures for dealing with requests to opt out of, and back into, the Civil Service pension arrangements.
Purpose of EPN
- There have been a number of cases where employers have been unsure of the correct procedures when individuals opt out of, and back into, the Civil Service pension arrangements. The purpose of this EPN is to clarify what you need to do.
- Individuals covered by the Civil Service pension arrangements have the right to opt out of the pension scheme; either immediately at the start of their employment or any stage during that employment.
Enquiries on Opting Out
- If one of your employees enquires about opting out you should direct them to the fact sheet, on the publications, rules and forms section on the CSP website www.civilservice-pensions.gov.uk If after reading the fact sheet, the member wishes to proceed with opting out, you should direct them to your APAC. Your APAC will reply to the member providing details of the opting out process and benefits the member would give up if they leave the scheme.
Individual Opts Out
- If the member decides to opt out, your APAC will write to the member to confirm the impact of this decision on their contributions and pension benefits. The APAC will also write to you advising you to stop payment of member and employer contributions, (unless you have a separate arrangement by which your APAC contacts your payroll).
When does the option take effect?
- The decision to opt out will take effect from the next convenient pay period after a declaration is received by your APAC except where an individual opts out within the first 3 months.
- If an individual opts out of the scheme within 3 months of taking up employment their option will be backdated to their start date and adjustments made to contributions and National Insurance contributions.
- If an individual opts out without switching to a Partnership pension account they will automatically become a member of the State Second Pension Scheme (S2P). Consequently both the member and you, as employer, will pay higher rate National Insurance contributions.
Opting back into the scheme
- A former member who has previously opted out of the scheme can opt back in provided they remain in employment covered by the scheme. They have one option to rejoin the scheme they opted out of during any one period of employment (classic plus members rejoin premium). Employers should not treat former members wishing to opt back in as new joiners. Employers should forward enquiries or requests to their APAC. Your APAC will reply to the individual providing details of the impact of this option on benefits. This letter will include a form where the individual can confirm whether they want to resume membership of the scheme.
- Once a member has opted back into the scheme the APAC will write again to the individual with confirmation, and will tell them about the impact on their benefits. The APAC will also write to the employer advising the individual’s decision to opt back in and instruct them to write to their payroll provider to amend employee and employer contributions (unless an arrangement is in place where the APAC contacts directly). You should update your HR records accordingly.
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Civil Service Pensions