Workplace Pension Opt-Out Cost Calculator 2025/26
Calculate the true cost of opting out of your workplace pension. You lose your employer's contributions — not just tax relief. See projected lost pension pot over your career.
True Cost of Opting Out of Workplace Pension
Frequently Asked Questions
What happens if I opt out of my workplace pension?
If you opt out, your employer stops paying their contributions and you stop paying employee contributions. You receive no extra pay — the employer simply keeps their contribution. Your take-home pay increases by your employee contribution (net of tax relief), but you lose the employer's free money. Auto-enrolment rules require your employer to re-enrol you every 3 years.
Do I get the employer pension contribution as extra salary if I opt out?
No. The employer contribution belongs to the pension — if you opt out, the employer simply stops paying it. You do NOT receive extra salary equal to the employer contribution. This is why opting out is almost always financially detrimental: you lose free money with no replacement.
What are the minimum auto-enrolment contribution rates?
From April 2019: minimum total 8% (employer 3% + employee 5%) based on qualifying earnings (£6,240–£50,270 band in 2025/26). Many employers contribute more. Some use total earnings rather than qualifying earnings as the contribution basis, which increases both employer and employee contributions.
Can I get a refund if I opt out shortly after joining?
Yes — if you opt out within one month of being auto-enrolled, you can get a full refund of your employee contributions (but not the employer's). After one month, you can stop contributions going forward but cannot reclaim contributions already made. To request a refund, contact your pension provider.
What if I have debts — should I opt out to pay them?
If you have high-interest debt (e.g. credit cards at 20%+), you might consider whether pension contributions are optimal. However, the employer match provides an immediate guaranteed return that no debt repayment strategy can beat. A better approach is to pay employer-matched contributions while aggressively paying down debt with your remaining income. Never opt out just to service standard debts.
What is the tax relief on pension contributions?
Employee pension contributions receive income tax relief at your marginal rate. For basic-rate (20%) taxpayers, a £100 contribution costs only £80 net of tax. For higher-rate (40%) taxpayers, £100 costs only £60. Via salary sacrifice, you also save National Insurance (8% basic rate, 2% above UEL), making it even more efficient. The effective return on day 1 from a matched employer pension is typically 100%+ after tax relief.
How do I opt back into my workplace pension?
You can opt back in at any time by notifying your employer in writing. Your employer must re-enrol you within one month. If you were auto-enrolled and opted out, you will be automatically re-enrolled every 3 years. You cannot opt out more than once every 12 months.
What is the State Pension impact of opting out?
Opting out of your workplace pension does not affect your State Pension — that is based on National Insurance contributions, not pension savings. However, your total retirement income will be lower without the workplace pension, making you more dependent on the State Pension alone (£221.20/week maximum in 2025/26, or £11,502/year — far below typical living standards).