Employers are reminded of the importance of using the correct termination code when closing down a pension record normally from the beginning of the next pay period.
Exit code 16 should be used for all cases where the member continues to work but has signed form SD502 to opt out of paying pension contributions.
Exit code 01 is used when a member leaves the employment altogether.
A recent review identified several ‘opt out’ cases where Exit code 01 had been used resulting in an inaccurate membership record. As well as holding incorrect data for the member, this can also lead to several issues with the benefits being paid. For example, inaccurate payable dates where a 24-hour break has not been taken at retirement age, which may lead to the incorrect payment of pension and lump sum as well as taxation issues
In the 1995 Section, an opt-out period spanning the members normal pension age can also sometimes mean subsequent periods of pension contributions can be pensionable. Incorrectly using Exit code 01 would identify that the member had left prior to their normal pension age and had instead returned to non-pensionable re-employment.