Please be aware that Xero can only run one pension scheme, so this should be the salary sacrifice scheme by default. Here are the steps to change the current setup, and to add a new pension deduction for those employees who are to remain on your current pension deduction if required.

Please note that percentages used in these examples are only for demonstration purposes and you should continue to use your company's minimum contribution levels.

Step 1

Payroll Settings

Workplace Pension

Under Pension Scheme, click Edit

Click Disconnect to allow you to Edit the scheme if this is greyed out

Keep in place the employee 5% and employer 3% contribution percentages.

Under Show balance to employees select Yes

Ensure Calculate on Qualifying Earnings: No

Check the box to reflect a Salary sacrifice scheme.

Reduce by basic tax rate: No

Save

Your new CSV file should then reflect a zero employee contributions and only show figures in the employer column.

The following steps are only required if you have employees who are not moving to the new salary sacrifice pension deduction

Step 2 - Create new pension for employees who are remaining on the Net Pay Arrangement pension deduction.

Payroll Settings

Pay items

Click Deductions on the left hand side

Add > Pre-Tax Pension (NPA)

Name this Pension (NPA)

Select % of Gross

Percentage: 5% Select your relevant Liability Account

Select Qualifying Earnings if required.

Click Add

Step 3 - Assign NPA pension to employees

Payroll Employees Click on employee’s Pay Template

Under Deductions, Delete the salary sacrifice pension deduction + Deduction - Add the Pension (NPA) as 5%.

Under Employer pensions, ensure the employer pension still reflects 3% (No change required)

Step 4 - Employer Pension Deduction Ensure that an employer deduction of 3% is still showing on the employee's pension tab. If not:

select Payroll Settings

Pay items

Click Employer Pensions

Add > Pension

Name this Er Pension

Select a Calculation Type > % of Gross,

Percentage: 3%

Select your relevant Liability Account

Select Show Balance to Employee

Check the box for Calculate on Qualifying Earnings if applicable

Click Add

Step 2 - Create new pension for employees who are remaining on the Relief at Source pension deduction.

Payroll Settings

Pay items

Click Deductions on the left hand side

Add > Post-Tax Pension (RAS)

Name this Pension (RAS)

Select % of Gross

Percentage: 5% Select your relevant Liability Account

Select Qualifying Earnings if required.

Check the box for Reduce by PAYE Basic Rate

Click Add

Step 3 - Assign RAS pension to employees

Payroll Employees Click on employee’s Pay Template

Under Deductions, Delete the salary sacrifice pension deduction + Deduction - Add the Pension (RAS) as 5% Under Employer pensions, ensure the employer pension still reflects 3% (No change required)

Step 4 - Employer Pension Deduction -

Ensure that an employer deduction of 3% is still showing on the employee's pension tab. If not:

select Payroll Settings

Pay items

Click Employer Pensions

Add > Pension

Name this Er Pension

Select a Calculation Type > % of Gross,

Percentage: 3%

Select your relevant Liability Account

Select Show Balance to Employee

Select Qualifying Earnings if required.

Click Add