How to Opt Out of a NEST Pension – Step-by-Step Guide

Want to opt out of your NEST pension? Learn how to cancel your pension, get a refund and understand the impact of opting out. Find out the deadlines and process here.

If you have been automatically enrolled into a NEST pension by your employer but do not wish to participate, you have the option to opt out. However, there are strict rules about when and how you can do this. Opting out within the required timeframe ensures that any contributions you have made are refunded, but if you miss the deadline, your money will remain in the pension until you retire.

This guide explains the process of opting out, the deadlines involved, and the potential consequences of leaving the scheme.

What is a NEST Pension?

NEST (National Employment Savings Trust) is a workplace pension scheme set up by the government to help people save for retirement. Under the auto-enrolment system, eligible employees are automatically enrolled into a pension scheme, and contributions are deducted from their salary.

Your employer will contribute to your pension as well, and the government provides tax relief to boost your savings. However, if you do not want to stay in the scheme, you have the right to opt out.

When Can You Opt Out of a NEST Pension?

You can opt out within one month of being automatically enrolled. This is known as the opt-out period, and it begins either:

  • From the date you receive your enrolment letter from NEST

  • From the date your employer adds you to the scheme, whichever is later

If you opt out within this timeframe, any contributions you have made will be refunded, and you will be treated as though you were never enrolled.

How to Opt Out of a NEST Pension

If you decide to opt out, follow these steps:

  1. Get Your NEST Enrolment Details
    You will need your NEST ID or opt-out code, which is included in your enrolment letter. If you cannot find this information, ask your employer for assistance.

  2. Go to the NEST Website or Call NEST
    Visit www.nestpensions.org.uk and log in using your details. Alternatively, you can call NEST’s opt-out helpline.

  3. Complete the Opt-Out Process
    Follow the instructions to confirm your decision. You may need to answer a few questions to ensure you understand the implications of opting out.

  4. Notify Your Employer
    Once your opt-out request has been processed, NEST will inform your employer. Your employer will then stop making deductions from your salary, and any money you have already contributed will be refunded in your next payslip.

What Happens If You Miss the Opt-Out Deadline?

If you do not opt out within one month, you cannot get a refund of your contributions. Instead, your pension will remain invested in the scheme until you reach retirement age. However, you can still stop future contributions at any time.

To stop contributions after the opt-out period:

  1. Log in to your NEST account.

  2. Choose the option to stop making payments.

  3. Inform your employer so they can adjust payroll deductions.

Although you will not receive a refund, your pension savings will continue to grow, and you can access the money once you reach 55 (rising to 57 from 2028).

What Are the Consequences of Opting Out?

Before opting out, consider the long-term impact:

  • You will lose employer contributions. Your employer is legally required to contribute to your pension. By opting out, you are effectively turning down free money.

  • You will miss out on tax relief. The government adds tax relief to pension contributions, which boosts your savings.

  • Your retirement savings may be lower. If you opt out and do not make alternative savings arrangements, you may not have enough money in retirement.

Many people who opt out later regret it, as even small contributions can grow significantly over time. If you are unsure, consider speaking to a financial adviser before making a final decision.

Can You Rejoin NEST After Opting Out?

Yes, if you change your mind, you can ask your employer to re-enrol you at any time. Employers are also required to re-enrol employees every three years, so if you opt out now, you may be automatically re-enrolled in the future.

Final Thoughts

Opting out of a NEST pension is a straightforward process, but it should be carefully considered. If you opt out within one month, you will receive a full refund, but if you miss the deadline, your contributions will remain in your pension until retirement.

Before making a decision, weigh the benefits of staying in the scheme, including employer contributions and tax relief. If you need short-term financial relief, stopping contributions rather than opting out completely might be a better option.