Define whether pension contributions are subject to NI or tax

To enable the software to calculate employees’ net pay correctly, you must indicate whether pension contribution payments are subject to NI and/or tax.

An employee can contribute to multiple pension schemes. For each pension scheme set up for your organization in the software, you must indicate whether tax and/or NI is deducted from the pension contributions.

Because legislation can change how pension contributions are handled, you can use the following procedure to confirm that your pension scheme settings for pension contributions are correct and comply with statutory requirements.

To specify whether tax and/or NI should be deducted from employee pension contributions:

  1. Click Payroll > Module Setup > Pension Scheme. The Pension Scheme window is displayed, and all the pension schemes set up for your organization are listed.
  2. Select a pension scheme.
  3. Click Edit to edit the details for the pension scheme. The Pension Scheme window is displayed
  4. Click the Controls tab.
  5. Under EMPLOYEE CONTRIBUTIONS ONLY, select the check boxes to indicate that the contibution is subject to NI or tax. Under current legislation, for the tax year 2011-12, pension payments are currently not exempt from NI but they are exempt from income tax, so you should clear the Adjust NIable Gross (Standard) and Adjust NIable Gross (Standard) check boxes, and select the Adjust TAXable Gross (Standard) and Adjust TAXable Gross (Voluntary) check boxes.
  6. Click Save to save the details.
  7. Click Close to close the Pension Scheme window.
  8. Click Close to close the Pension Scheme window.

For each pension scheme set up for your organization, repeat the steps in the above procedure to specify or confirm the settings for tax and NI.