Coming back to the original query, there are 2 types of pensions
1. Mandatory pension contribution that comes out as part of your NI contributions and goes towards your weekly pension once you retire
2. Private pension where employee puts X% and employer puts (X+N)% which is based on criteria like age etc. When you retire, you get the standard pension due to your NI contributions plus this amount which is usually a lot higher given you give and your employer make a monthly contribution
Do not get confused between the two.
1. The word 'opt out' is used for mandatory pension to the govt. You can opt out of letting the govt invest this money and instead chose another pension provider of your choice. There is no way this money can be encashed until retirement. You will always have to give this contribution but can opt out of the govt managing investment of this amount and chose another provider. So its not really an opt out where you get more cash in hand now, its just an opt out of govt managing this investment for you.
2. Pension offered by the employer is voluntary. You can subscribe for it only if you want to. This amount will taken in addition to the contribution made as par of your NI every month.
Hence the statement
"A deduction of 5% will be taken from your salary by salary sacrifice in respect to employee contributions each month and the employer will make a contribution of 7%."
refers to this additional pension. You need to ask with your HR if this is compulsory or not and I believe it isnt. This is an excellent benefit of course provided you spend you life here and retire in the UK at 65 or 70
Otherwise, like is the case for many of us, it makes no sense and you can let your company know you dont want this pension from them.
Hope this helps
KP
