Automatic enrolment

If you wish to opt out of the scheme within three months of joining, please use the Notice to opt out of pension saving form, which you will need to complete and return to your employer as soon as possible after joining the scheme. For further details on the deadline for submitting this form please contact your employer.

Overview

You may have seen television and newspaper adverts regarding a pension saving initiative which has been introduced by the government called automatic enrolment. Auto-enrolment aims to increase the number of people who are saving with a workplace pension scheme so as to give them an income in retirement in addition to the state pension. It places certain enrolment duties on employers.

If you are already an active member of USS, then it is unlikely that you will be affected by auto-enrolment. If you have just started, or are about to start, a USS pensionable post with a university or institution and you become an active member of USS, again it is unlikely that you will be affected by the new auto-enrolment legislation. However, there are certain groups of individuals who will be affected and details are provided in the questions and answers below. If you have any questions on the changes discussed here - or on auto-enrolment in general - then please contact the pensions or HR department at your institution.

Some background information

Auto-enrolment applies on different dates depending on the size of your employer, starting with the largest and ending with the smallest - the largest UK employers started to auto-enrol their employees in 1 October 2012. The date on which auto-enrolment applies to an employer is known as the 'staging date'. The largest USS institutions had a staging date of 1 March 2013 - your employer will be able to advise you when its staging date is.


In terms of USS, the vast majority of eligible employees are enrolled into the scheme automatically, irrespective of their age and earnings. However, prior to an employer's staging date, certain groups of individuals are either not allowed to join the scheme or are not automatically enrolled into the scheme.


In order to assist USS institutions in fulfilling their auto-enrolment duties, changes have been made to the scheme in respect of these groups. Generally, such individuals will be automatically enrolled into the scheme if they fit into a certain category of worker, known as an eligible jobholder. In order to be an eligible jobholder you must meet certain criteria, which are based upon factors such as age and earnings. If you do not meet these criteria, you may instead be able to opt into a pension scheme. The table below outlines the different categories of worker and explains whether these categories give rise to automatic enrolment or the right to opt into a scheme. In all cases the worker must also be working or ordinarily work in the UK. For further details on which category of worker you belong to please speak to your employer.

Automatic enrolment or opt in?

Age Qualifying Earnings

Eligible Jobholder

Automatic

22 or over and under state pension age More than £10,000

Non-eligible Jobholder

Opt in

16 to 21 or state pension age to 74 More than £5,824
22 or over, but under state pension age More than £5,824, but not more than £10,000

Entitled Worker

Opt in

16 to 74 £5,824 or less

The earnings figures shown in the above table apply to the 2016/2017 tax year, and will be reviewed each tax year by the government and, if thought appropriate, either increased or decreased. When your employer assesses which of the categories of worker you belong to:

  • it has to consider earnings that meet a specific definition of "qualifying earnings" which covers not only salary and wages but also bonuses, commission, overtime and certain statutory payments; and
  • it does not look at your annual earnings but rather at earnings in the relevant pay period and compares them to pro-rated amounts of the thresholds referred to in the table above. For example, if your pay period is monthly, while the threshold of £10,000 is in place the monthly equivalent which your earnings will be measured against will be £833.

Many of the updates made to the scheme for auto enrolment are already in place, while some take effect from your employer's staging date.

Will I be affected?

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I am already an active member in the scheme, will I be affected by auto-enrolment?

If you are already an active member of USS, then it is unlikely that you will be affected by auto-enrolment and you will remain active in the scheme. However, changes have been introduced for a limited number of groups of active members;

Members reaching normal pension age or attaining 40 years’ of service

When you reach normal pension age or attain 40 (or 45 for MHOs or special class members) years’ of service then you will automatically continue to pay contributions to the scheme – unless you make an election to cease contributing. This provision has been in place since March 2013.

Members who have already reached normal pension age or attained 40 years’ of service

It may be the case that you reached normal pension age, or attained 40 (or 45 for MHOs or special class members) years’ of service, before 1 March 2013 and did not elect to continue paying contributions. If this is the case and you are an eligible jobholder then your employer has a duty under auto-enrolment to enrol you back into USS, meaning that you would start to pay contributions again from your institution’s staging date. Alternatively if you are a non-eligible jobholder or entitled worker then your employer has a duty to enrol you only if you decide to opt into the scheme. Please complete the following form 'Election by member to re-commence contributions to USS following automatic enrolment' and contact the pensions or HR department at your institution if this is the case.

Members who opted for enhanced protection (for tax purposes)

Please see the answer to ‘I have tax protection – how will the changes affect me?’ further down the page.

Flexible retirer taking up a separate, USS pensionable post

Please see the answer to ‘I am a re-employed pensioner – will there be any implications for me? I am a flexible retirer and have now taken up an additional USS pensionable post, will I be affected by auto-enrolment?’ further down the page.

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I have previously opted out of the scheme, or elected not to join, and remained in eligible employment, will I be affected by auto-enrolment?

In this situation, even though you may previously have indicated that you did not want to join, or remain in, the scheme, under the auto-enrolment legislation, your employer may be required to automatically enrol you or re-enrol you or comply with an opt-in request.  One of the following scenarios may apply to you:

If, on your employer's staging date, you have previously opted out or elected not to join the scheme, your employer will be required to assess you to determine what type of worker you are. If you are an eligible jobholder, then you will be auto-enrolled into the scheme on your employer’s staging date and if you are a non-eligible jobholder or entitled worker, you may choose to opt in to the scheme (if you are a variable time employee, please see the answer to 'I am a variable time employee - will there be any implications for me?' for details of a postponement period that may apply).

Following its staging date, approximately every three years your employer will have what is called an ‘automatic re-enrolment date’ – this is when they will need to automatically re-enrol any eligible jobholder who is not in a pension scheme on that date. The exception to this requirement is where the individual has opted out within 12 months prior to the automatic re-enrolment date. Therefore, if you are an eligible jobholder who opted out of the scheme more than 12 months before the automatic re-enrolment date then you will be automatically re-enrolled on this date.

Another date on which you may be auto-enrolled is the day on which you commence a new employment. For example, if you opt out (and remain in employment) but then leave employment and take up a new post, then this new employer will then have a duty to auto-enrol you when you start your new job.

In addition to the dates mentioned above, certain events may also trigger a requirement for your employer to auto-enrol you. It may be that you opted out of the scheme and were either a non-eligible jobholder or entitled worker, and then (at some point after your employer’s staging date) you become an eligible jobholder – perhaps due to an increase in earnings. In this instance then your employer will need to auto-enrol you into the scheme.  If on the other hand you remain to be a non-eligible jobholder or entitled worker, then you have to right to opt into the scheme at any point after your employer’s staging date. If your employer does not have a duty to enrol you under the auto-enrolment legislation, then you may apply to join the scheme.

In addition, you may have elected for enhanced opt out for tax protection purposes – if this is the case please see the answer to ‘I have tax protection – how will the changes affect me?’ further down this page. 

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I am a new member of staff of a USS participating institution, how will auto-enrolment affect me?

As an eligible employee, you will be automatically enrolled into the scheme by your employer on commencing the eligible employment, although some variations may apply if you fall into one of the following categories:

Re-employed pensioner, or flexible retirer taking up a separate, USS pensionable post

Please see the answer to ‘I am a re-employed pensioner – will there be any implications for me? I am a flexible retirer and have now taken up an additional USS pensionable post, will I be affected by auto-enrolment?’ further down the page.

Variable time employee

Please see the answer to ‘I am a variable time employee – will there be any implications for me?’ further down the page.

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I want to opt out of the scheme

If you opt out within three months of joining the scheme – known as retrospective withdrawal – you will be treated as though you were never a member. If you opt for retrospective withdrawal then you will be treated as though you were never a member, and a refund of any contributions you have paid would be made to you by your employer. Your employer is also responsible for making an adjustment to your tax and national insurance contributions so that any tax relief or lower national insurance payments which may have applied before you opted out will be adjusted.

You may have read in general auto-enrolment guidance elsewhere that the opt out period for those wishing to be treated as though they were never a member is one month. Where a scheme’s rules allow for a longer period, this longer period will apply – which is why the USS retrospective withdrawal period of three months applies here.  If you have a form of tax protection, for more information on opting out please see the answer to ‘I have tax protection – how will the changes affect me?’ further down the page.

A form is available for you to complete in these circumstances – called a ‘Notice to opt out of pension saving’. Under auto-enrolment it is important that employers do not in any way encourage their members to opt out of pension saving, and so because of this they are not able to give you a copy of the notice for you to fill out. Instead, if you want to opt out, you will be able to print off the notice to be completed from this website and you should then give it to your employer, who will in turn notify us of your decision to opt out. If you are unable to download the form, please email joiner.support@uss.co.uk and USS will provide you with a copy. Alternatively, you may write to Joiner Team, USS Ltd, Royal Liver Building, Liverpool, L3 1PY to request a copy.

You can, after the three month retrospective withdrawal period, decide to withdraw from the scheme at any time and opt to choose a refund of contributions (if available), defer your benefits, or transfer out to another scheme.

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I am a re-employed pensioner – will there be any implications for me? I am a flexible retirer and have now taken up an additional USS pensionable post, will I be affected by auto-enrolment?

Prior to the staging date of your employer, if you are in receipt of a USS pension and take up a USS eligible post after retirement then you will not be able to join the scheme in respect of this post. Similarly, if you take flexible retirement and afterwards take up an additional post that is a USS eligible post then you will not be able to join the scheme in respect of this post.

However, this will change from the staging date of your employer. It may be the case that, under auto-enrolment, your employer has a duty to automatically enrol you into a pension scheme - this will be the case if you are an eligible jobholder. If you do not fit the criteria of an eligible jobholder then your employer will not have a duty to automatically enrol you – however if you are a non-eligible jobholder or an entitled worker then they will have a duty to enrol you into a pension scheme if you decide to opt into pension saving.

So in order to enable institutions to use USS as the pension scheme for this group of employees, the scheme rules have been amended. This means that, from your institution’s staging date, if you fit into this category and your institution has a duty to make you a member of a pension scheme, then you will be enrolled into USS. If your institution has a staging date which is before 1 October 2016, then they do have the option to elect to use an alternative scheme – your employer will be able to let you know whether this is likely to be the case.

If you are a re-employed pensioner, or flexible retirer who has taken up an additional post, and your institution is using USS in order to fulfil its employer duties in respect of this group, then where there is a duty to enrol you, you will be enrolled into USS. The new benefits which you accrue will be kept totally separate from the benefits which you have already accrued and are in receipt of, and they will have no effect on the pension you are receiving. For flexible retirers who have taken up an additional post, the new benefits will also be kept completely separate from the benefits which remain in accrual following your flexible retirement

It should be noted that this group of members currently pay a contribution rate which is different to the ordinary rate of 8% and is dependent upon your age at the date of re-joining. This is because a decision was made by the Joint Negotiating Committee (JNC) that the Trustee Company would have a power to require these members to pay a contribution rate which reflects the cost of accrual for their age. This rate will be altered from 1 October 2016.

USS has a process available to employers which will assist them in establishing who in their employment is a re-employed pensioner or a flexible retirer. Therefore your employer will let you know if you are likely to be affected.

One additional point to consider here is that currently, in order for a member to be deemed to have retired, there must be no intention at the time of retirement for that member to commence another employment which is eligible for USS. This position will not change, and so will remain the same after your institution’s staging date. When referring to re-employed pensioners here, we are assuming that a pensioner has taken up a post after retirement which they did not plan to take up at the point that they retired.”

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I am a variable time employee – will there be any implications for me?

You may be a variable time employee (or a VTE) if you are employed by an institution on a casual or irregular basis, meaning that the salary you receive and/or hours you work may fluctuate on a month by month basis. Prior to your institution’s staging date, it is up to individual institutions whether they automatically enrol their VTEs into USS, or whether they would only enrol them upon receiving an election to join.

After your institution’s staging date this choice will be removed and the following will apply:

-    if on your employer’s staging date you are an eligible jobholder yet are not an active member of the scheme, there is no need to apply for membership and your employer will automatically enrol you into the scheme (subject to the point below in relation to postponement). 

-    if on your employer’s staging date you are a non-eligible jobholder or entitled worker yet are not an active member of the scheme, then you can choose to opt in to the scheme. If you do not opt to join USS, your employer will be required to assess your circumstances in each pay period to determine if you become an eligible jobholder – because of a change in your earnings or age – and, if you do so, then you will need to be automatically enrolled into USS.

-    if you are neither an eligible nor non-eligible jobholder nor an entitled worker, then your institution has no requirement to enrol you into the scheme, and so they may still require you to apply for membership – however it is unlikely that there will be many individuals in this position.

Your employer may decide to postpone their assessment of you for auto-enrolment purposes for a period of up to three months. If this is the case, your employer will have a duty to communicate the use of a postponement period to you.

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I have tax protection – how will the changes affect me?

It may be the case that you have some form of tax protection – such as enhanced or fixed protection – which requires that you do not begin a new pension arrangement if you wish to keep the protection. In the table below is a summary of the auto-enrolment implications of each tax option, and where there is a duty for you to be auto-enrolled comments on opting out are included.

There are other forms of tax protection and USS tax options. We do not envisage that auto-enrolment will have any impact upon HMRC primary protection or individual protection 2014, or the USS defer and restart option.

However, the very small number of members who have opted for temporary cessation of accrual as at their employer’s staging date should discuss this issue with their employer.

Brief description

Auto-enrolment implications

Opting out

Enhanced opt out

You opted to cease accruing benefits while paying a special contribution rate to maintain death in service and ill health cover, most likely alongside electing for HMRC fixed protection.

 

If you are an eligible jobholder then your employer may be obliged to enrol you into the scheme.

If you opt out within 3 months of being enrolled then you will not be treated as having recommenced service, however if you also have fixed protection then if you do not want to lose that protection, you would need to opt out within one month – please see below.

Fixed protection 2012 & 2014

You elected for protection prior to 6 April 2012 (or 6 April 2014 for fixed protection 2014) and so will have a lifetime allowance of £1.8 million (or £1.5 million for fixed protection 2014), provided that there is no benefit accrual (other conditions also apply).

If you are an eligible jobholder and are not an active member of the scheme, or have also taken enhanced opt out, then your employer may be obliged to enrol you into the scheme.

HMRC has issued guidance on this topic, however, the situation is not clear cut.  In order to guarantee that protection is not lost you would need to opt out within one month of being enrolled.

HMRC Enhanced Protection

You elected for protection prior to 6 April 2009 and so will have no liability to the lifetime allowance charge, provided that there is no further relevant benefit accrual (plus other conditions).

 

If you are not an active member, or have also taken USS enhanced protection, then if you are an eligible jobholder your employer may be obliged to enrol you into the scheme.

HMRC has not published guidance on this topic in the way it has in relation to fixed protection, however we understand that it has written to individuals with this protection regarding this issue. It would appear that in order to guarantee that protection is not lost you would need to opt out within one month of being enrolled.

USS Enhanced Protection

You opted to cease accrual and have benefits potentially capped while paying a special contribution rate to maintain death in service and ill health cover.

If you are an eligible jobholder and have taken USS enhanced protection then your employer may be obliged to enrol you into the scheme.

If you opt out within three months you will not be treated as having recommenced service, and you revert to paying the 1% contribution as a USS enhanced protection member.

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I am a multiple appointment member, how will auto-enrolment affect me?

A multiple appointment member is a member who holds more than one post in respect of which they are a member of USS – these posts may be at the same or different institutions.  If you are a multiple appointment member then one of your posts will be defined as your greater post. This will most likely be the one for which you have a higher part time service fraction, or receive the highest salary. Your other post(s) will therefore be deemed to be the lesser post(s).

If you withdraw from your greater post you will continue to be a member in respect of your lesser post(s) unless you decide to also withdraw in respect of this post.

In addition to this, certain restrictions upon re-joining in a lesser post were removed as of 1 March 2013, meaning that your employer will be able to auto-enrol you in respect of such a post if such a duty exists.

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I work at a medical school, will I be auto-enrolled into USS or NHSPS?

It may be that you work, or are about to commence work, at a medical school (see note below) and are eligible for membership of either USS or the NHS Pension Scheme (NHSPS). This section will provide you with more information on this matter in light of a recent change in the law which requires your employer to automatically enrol you into membership of a pension scheme in certain circumstances – often referred to as auto-enrolment,

I already work at a medical school and am an active member of either USS or NHSPS. How am I affected?

As you are already in a pension scheme – either USS or NHSPS – your employer will not need to take any action because of their auto-enrolment duties. You will remain an active member of that scheme.

I already work at a medical school but am not a member of either USS or NHSPS. How am I affected?

If you are not already a member of either of these schemes, then (assuming you are an eligible jobholder) you will need to be auto-enrolled into one of these schemes on the date on which you become an eligible jobholder (most likely your employer’s staging or automatic re-enrolment date). When determining the appropriate pension scheme, your employer will need to consider not only its auto-enrolment requirements, but also the rules of both of the schemes.

It may be that you joined USS when your employment commenced and have subsequently opted out. Given that you are not a member of a pension scheme, your employer may need to auto-enrol you into a scheme on their staging or automatic re-enrolment date. If you have previously opted out of USS (and did not subsequently join NHSPS), then on your employer’s staging date or automatic re-enrolment date, you would be auto-enrolled back into USS.

For more information on joining USS after opting out, please see the answer to ‘I have previously opted out of the scheme, or elected not to join, and remained in eligible employment, will I be affected by auto-enrolment?’ further up the page for more information.

Alternatively, you may have joined NHSPS upon commencing employment (or you may have joined NHSPS after opting out of USS) and have since opted out of NHSPS. If this is the case then you will not be allowed to join USS, as it is not permitted by the scheme rules. Please contact your employer to obtain further information on the NHSPS rules which apply in this situation, which is referred to in the answer to ‘Are there any situations in which I may be prevented from becoming a member, or continuing in membership, of either USS or NHSPS?’ below.

I am about to start, or have recently started, work at a medical school. How am I affected?

Your new employer will need to enrol you into a scheme when you commence employment. In order to fulfil their auto-enrolment duties, an employer must use a scheme which meets certain criteria – one of these criteria is that the employee must not be required to take any action in order to become an active member of the scheme. In order to join NHSPS (as their rules currently stand) you would need to apply for membership, and so our understanding is that NHSPS do not meet this requirement. Therefore, if you fit into this group then your employer is required to enrol you into USS.

However, it may be the case that you wish to join the NHSPS in respect of this new post. If this is the case you will need to speak to your employer to check if you are eligible for NHSPS under the terms of the direction (see note below). If you are eligible then you will need to apply for membership of the NHSPS within three months of commencing employment and you would also need to opt out of USS.

You should bear in mind that in limited circumstances in the following question, below, you may be prevented from becoming a member, or continuing in membership, of USS or NHSPS either now or at some point in the future.

Are there any situations where I may be prevented from becoming a member, or continuing in membership, of either USS or NHSPS?

There are very limited circumstances in which this may be the case and it is likely that this will apply to a very small number of employees. If after commencing employment, you opt out of USS so that you may join NHSPS, at a later point in your employment it may be the case that you are required to cease active membership of NHSPS, for example if you reach the 40 year service limit or if your membership runs out under a time-limited direction (your employer will be able to give you details of such a direction). If you are an eligible jobholder, you employer will need to auto-enrol you into a pension arrangement.

If this scenario applies to you then your employer is not able to enrol you into USS as it is prevented from doing so by the scheme rules, which state that an individual cannot join USS if he/she has previously elected to remain an NHSPS member. However the rules also prevent your employer from contributing to another pension scheme on your behalf – this is known as exclusivity – meaning that if no allowances were made, your employer would have no way of fulfilling any auto-enrolment duties which may apply. Therefore the trustee board has agreed to waive exclusivity, meaning that in these limited circumstances your employer can enrol you into an alternative scheme in order to fulfil its duties and to ensure that you are auto-enrolled into a suitable pension arrangement.

If you think that you may be affected then please contact your employer for further details.  

Note on HS directions and medical schools

If your employer is a medical school, it will fall under what is known as an NHS direction – a legal document which outlines that certain employees are eligible to join NHSPS. Generally, directions state that in order to be eligible to join NHSPS, you must (i) have been entitled to participate in NHSPS in a previous employment, (ii) have commenced your new employment within 12 months of leaving that previous employment, or still be continuing in said employment. However, you will need to check these terms with your employer.

Those wishing to join NHSPS must apply in writing within three months of starting the new employment.

Medical schools, which are defined by the directions described above, are generally part of a university or college at which instruction is given only to medical or dental students, including any post graduate institutes for medical or dental research. Your employer will be able to confirm whether your employment comes under a direction.

It is worth mentioning that all of the above information is based upon our understanding of the current rules of NHSPS. It may be the case that NHSPS seeks to make changes in the future in order to enable employers to use it as an auto-enrolment scheme.

Last updated: 04/08/2016
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