If your pension provider is Nest or The Peoples Pension, you will need to set up a new worker group or make the necessary adjustments before following the steps below.
Make note of any Additional Voluntary Contributions (AVC) currently in place – this will determine the actions required below.
Set up a new pension group:
PENSIONS >
Add Group - NOTE: You must use the same new group name as you have set up with your pension provider.
Contribution Type: set to “Use custom contribution rates (%)”
Percentages: Enter 0% Employee and then enter the total contribution for the Employer. e.g. if your minimum contributions are 5% employee and 3% employer, enter 8% Employer.
Earnings Basis: select:
a. Standard Qualifying Earnings Only for pensions to be calculated on qualifying earningsor
b. Custom Qualifying Earnings and Remove Limits. This will calculate pension from the first £1 of earnings.Switch Employees to new group:
PAYROLL >
Click on any employee who is currently enrolled >
Access their Automatic Enrolment utility>
Click on Switch to a different scheme >
Select the new scheme with no tax relief. Then click on Switch multiple employees with these settings
3. Add employee deduction:
EMPLOYER >
Deduction Types > New
Type in “Pension salary sacrifice”
Calculation method:
a. “% of Automatic Enrolment qualifying earnings” for a qualifying earnings scheme
or
b. “Custom qualifying earnings” if you are not using qualifying earnings
Default percentage: Enter the minimum E’ee %
Click Repeat until manually removed
Tick Deduct before tax
Tick Deduct before NI
4. Add a separate AVC deduction (only if required)
EMPLOYER >
Deduction Types > New
Enter “Pension AVC”
Calculation method: “Basic Amount”
Default amount: Enter “0”
Click Repeat until manually removed
Tick Deduct before tax
Tick Deduct before NI
5. Add the new pension deductions to each employee
PAYROLL >
More >
Add deduction to multiple payslips >
Add the Employee pension deduction and, if required, the AVC deduction as well
6. AVC amount: Any AVC must be added to the total Employer contribution. Enter this amount in the “Employer set amount”. In Additions and Deductions, click spanner and tick “persist once off contribution amounts”. Alternatively, set this as a percentage by adding the percentage to the existing employer contribution %
7. Check your employees are in the correct group
PENSIONS >
Enrolment summary
8. Ensure the correct Pay Elements are included in the pension calculation –
Ensure the correct payments (e.g. salary, bonus, commission etc) are included in the salary sacrifice pension calculation – see table below
EMPLOYER >
Payment Types >
Ensure this is ticked > “Eee & Eer Pension can be deducted”
NOTE: Going forward, your CSV file for pension submissions will reflect zero employee and only show figures in the employer column for employees on the salary sacrifice pension scheme.
Table of The Pensions Regulator minimum contribution requirements
Pensionable Pay Basis | Earnings to be included in calculation | Minimum Employer Contribution | Minimum Total Contribution |
Qualifying earnings | The band of gross annual earnings used to calculate minimum contributions is currently earnings between £6,240.00 and £50,270.00 and pensionable earnings must include all earnings such as salary, bonus, commission, holiday pay and overtime | 3% | 8% |
Tier 1 - Basic Pay | Pensionable pay is calculated from the first £1 earned and must include at least the workers basic salary. | 4% | 9% |
Tier 3 - All Pay | Pensionable pay is calculated from the first £1 earned and must include all earnings such as salary, bonus, commission, holiday pay and overtime. | 3% | 7% |
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