You have to pay into Social Security, and if you work for the government you almost certainly have to pay into a public pension too. A workplace 401(k) or 403(b) is different: you can opt out even if your employer automatically enrolled you. So the honest answer to whether you have to pay into a pension depends on which system you’re being asked to fund, and the rules are not the same across the three.
Social Security Is Mandatory
There is no opt-out from Social Security for regular wage earners. Your employer withholds 6.2% of your wages for Social Security and 1.45% for Medicare, and pays a matching amount on your behalf.1Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax The 6.2% applies only to the first $184,500 of earnings in 2026; wages above that stay subject to Medicare withholding but drop out of the Social Security tax.2Social Security Administration. Contribution and Benefit Base An additional 0.9% Medicare surtax hits wages above $200,000 for single filers or $250,000 for joint filers.
Self-employment does not get you out of it either. If you work for yourself, you owe both halves — 12.4% for Social Security and 2.9% for Medicare, 15.3% combined. You can deduct the employer-equivalent half when calculating your adjusted gross income, which softens the blow at tax time.3Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
To collect retirement benefits later, you need 40 credits, roughly 10 years of covered work.4Social Security Administration. Retirement Benefits Fewer working years mean a smaller monthly check because the benefit formula averages in zeros for any missing years up to 35.
Workplace 401(k) and 403(b) Plans: You Can Opt Out
Unlike Social Security, a private-sector retirement plan is voluntary from the employee’s side. What changed under the SECURE 2.0 Act is that many new employees are enrolled by default rather than by choice. Plans set up after December 29, 2022, generally must automatically enroll eligible workers starting January 1, 2025. The initial contribution rate must fall between 3% and 10% of pay, and the plan must bump that rate up by 1% each year until it hits at least 10% but no more than 15%.
Some employers are outside the mandate:
- Companies with fewer than 10 employees
- Companies that have existed for less than three years
- Church plans and government plans, which follow separate rules
- Plans established before December 29, 2022, which are grandfathered
Grandfathered plans can still offer auto-enrollment voluntarily, and many do. In a qualified automatic contribution arrangement, deferrals typically start at 3% and rise to 6%, capped at 10%.5Internal Revenue Service. Retirement Topics – Automatic Enrollment Whatever the structure, auto-enrollment means money is coming out of your paycheck until you tell the plan to stop.
How to Opt Out of Automatic Enrollment
You have two separate rights: the right to stop future contributions, and, for a limited time, the right to get back what has already been withheld.
Plans with an Eligible Automatic Contribution Arrangement give you between 30 and 90 days from your first automatic contribution to request a full withdrawal of everything deducted so far.6Internal Revenue Service. Can an Employee Withdraw Any Automatic Enrollment Contributions From the Retirement Plan Money you pull back within that window counts as taxable income for the year, but the 10% early withdrawal penalty that normally applies before age 59½ does not.7Internal Revenue Service. 401(k) Plan Fix-It Guide – 401(k) Plan – Overview
To make the change, log into your plan’s website or contact the plan administrator and set your deferral election to 0%. HR can point you to the portal, but the election is filed with the plan, not with your manager. Deductions should stop by the second pay period after your election or within 30 days, whichever comes first.6Internal Revenue Service. Can an Employee Withdraw Any Automatic Enrollment Contributions From the Retirement Plan
Miss the withdrawal window and you can still cut off future deferrals at any time. The contributions already sitting in the account, though, stay locked in. You cannot pull them out penalty-free until you turn 59½, leave the employer, or meet one of the narrow exceptions under the tax code.8Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
Public Sector Pensions Are Not Optional
If you work for the federal, state, or local government, your pension contribution is generally mandatory. Federal civilian employees under the Federal Employee Retirement System pay a percentage of salary based on hire date:
- Hired before 2013: 0.8% of salary
- Hired in 2013: 3.1% of salary
- Hired in 2014 or later: 4.4% of salary
Those deductions come out every pay period alongside FICA and cannot be waived.9U.S. Department of Commerce. Federal Employee Retirement System (FERS) State and local workers typically contribute between 5% and 12% of salary to their state retirement system, with rates varying by jurisdiction. Some public workers in older systems do not pay into Social Security at all, but they still pay into their pension.
What Opting Out Actually Costs
Stopping contributions to a workplace plan is easy. The financial consequences take longer to show up. The first thing you lose is the employer match. Most employers that match contribute somewhere between 4% and 6% of pay, often as 50 cents on the dollar up to 6% of salary. Contribute nothing, get nothing. And if you take a withdrawal during the opt-out window, any matching contributions tied to those deferrals are forfeited on the way out.6Internal Revenue Service. Can an Employee Withdraw Any Automatic Enrollment Contributions From the Retirement Plan
Compounding is where the real cost lives. Take a worker earning $60,000 who contributes 5% with a 4% employer match: $5,400 goes into the account each year. Over 30 years at a 7% average annual return, that balance reaches roughly $510,000, and the employer match alone accounts for more than $200,000 of it. Opting out means keeping a little more take-home pay now and giving up all of that later.
You also give up the current-year tax break. A traditional 401(k) contribution comes out of pre-tax pay, so a $5,000 contribution effectively costs a worker in the 22% bracket about $3,900 out of pocket. Opting out means paying full income tax on that money.
There are reasonable short-term reasons to pause, like clearing high-interest debt or handling an actual emergency. If your employer offers a match, though, contributing at least enough to capture the full match is usually worth it even on a tight budget. That is money your employer has already agreed to hand you, and it only arrives if you show up for it.