How do I set up a pension scheme in Platinum Payroll?

Summary

The following article explains how to set up Pension Schemes. This enables the system to calculate contributions correctly.

More Information

• Go to " Payroll Payroll Parameters/Maintenance Company Parameters Period Adjustments".

Your screen will resemble the screen displayed below:

                               Pension Schemes

                    <---- Employee ----> <-- Employer -->
      Description   TAX %  %/Value   Lim %  %/Value   Lim Reb  SCON.    Lim
 1  COSR Pension     N  Y     0.00    B  Y     0.00    B   S             B
 2  COMP Pension     N  Y     0.00    B  Y     0.00    B   M             B
 3                   N  Y     0.00    B  Y     0.00    B                 B
 4                   N  Y     0.00    B  Y     0.00    B                 B
 5                   N  Y     0.00    B  Y     0.00    B                 B
 6                   N  Y     0.00    B  Y     0.00    B                 B
 7                   N  Y     0.00    B  Y     0.00    B                 B
 8                   N  Y     0.00    B  Y     0.00    B                 B
 9                   N  Y     0.00    B  Y     0.00    B                 B
10                   N  Y     0.00    B  Y     0.00    B                 B

General Details

The information that you need for this screen should be provided by the people who arranged the pension scheme for you, and any questions should first be aimed at them. There is information required for both the Employee and the Employer, depending on whether the employer contributes to the scheme. The fields and their purpose are the same for both employee and employer and are explained below.

Description

Enter a description for the pension scheme. There are two defaults set up for the common types - 'COSR' - salary related and 'COMP' - money purchase.

Tax

Are the pension contributions subject to tax at source? Generally this would be 'No', but if the tax is reclaimed at a later stage or legislation changes, this can be set to 'Yes' if required. If you are not sure, check with your pension adviser. Click this link to check the definition of the type of scheme you are involved with Workplace pensions and tax relief

Note: If you choose to run the NEST scheme for auto-enrolment, the contributions are taxed at source and are generally a percentage of Gross Pay. NEST reclaim the tax from HMRC and add it to your pension contributions. This means that you will need to reduce the percentage deducted from the employee by the basic rate of tax and set this "Tax" flag to 'Yes'. Do NOT reduce the percentage for the employer. For example, if the employee and employer are contributing '1%' each to the scheme with the basic rate of tax at 20%, then the employee percentage should be '0.80%' (1-0.2), while the employer percentage should be left at '1%'. You should be able to check the exact values to be deducted with your pension provider. You can get a good estimate of the values at this link to the Money Advice Service pension calculator - this can provide a good guide but may not be definitive.

%

Is the Value, entered in the "%/Value" column to the right, a Percentage?

• 'Y' - Yes, the value is a Percentage.
• 'N' - No, the value is an Actual Value.

%/Value

Enter the 'Percentage' or 'Actual Value' which the employee or the employer will contribute to the pension scheme. This is a default field which can be left blank. When you are linking a scheme to an employee you can amend the employer's contribution for an individual, if it differs from the default.

• Percentage: - The Percentage of the Pensionable Gross to contribute to the pension by the employee or employer (the Pensionable Gross may be limited by the Upper & Lower NI Limits).
• Actual Value: The Actual Value the employee or employer will contribute to the Pension Scheme.

Note: You will need to know how tax relief applies to the Employee contributions. You should find this out from your pension provider. Under the NEST scheme, the tax relief is claimed "at source", in other words, NEST claim the tax back from HMRC. In these circumstances, to deduct the correct figure you will need to reduce the employee percentage contribution by the basic rate of tax as noted above. Do NOT reduce the employer contribution.

Limits

Define the NI Limits to be applied to the Employee's Pensionable Gross if Percentage Calculations are to be used.

• 'N' - Calculate the Pension on the Whole Pensionable Gross.
• 'L' - Limited to the NI Lower Earnings Limit only.
• 'U' - Limited to the NI Upper Accrual Point only.
• 'B' - Apply the percentage to pensionable gross between the NI Lower Earnings Limit and Upper Accrual Point.
• 'E' - Limited to the NI Upper Earnings Limit only.
• 'O' - Apply the percentage to pensionable gross between the NI Lower Earnings Limit and Upper Earnings Limit.

Other Parameters

Reb

Is the Payroll to calculate the NI Contracted Out Rebate?

• 'S' - this is a Salary Related Pension
• 'M' - this is a Money Purchase Pension
• ' ' - Leave blank if this pension scheme is not contracted out.

SCON

If this is a Contracted Out Pension Scheme, you will have a SCON "S4" number provided by the people who arranged the scheme. This should be quoted on year end documentation.

• Enter the SCON value provided.

Lim

What NI Limits are to be used to calculate NI Rebates?

• 'N' - Calculate the Pension on the Whole Pensionable Gross.
• 'L' - Limit calculations to the Lower NI Limit only.
• 'U' - Limit calculations to the Upper NI Limit only.
• 'B' - Apply the percentage to the Pensionable Gross between the Lower and Upper Limits minus the Lower Limit.

To allocate a Pension Scheme to an employee, see Employee Amendments - TAX, NI & Pension. You can amend the default Employee and Employer's contribution if necessary. You can also enter voluntary top up contributions for both the Employee and the Employer if applicable.

See also

• How do I Prepare for Automatic Enrolment?
• How do I Add a New Employee to the Payroll?
• Payroll End of Year
• How do I Run a Payroll Period?
• How do I Close a Payroll Period?

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Keywords AND Misspellings

Pension, scheme, payroll, Parameters