Pensions

Use this window to maintain details of corporate or personal pensions to which the employer and/or employee makes a contribution through the Payroll module.

Use this window is to attach the currently selected HR record to one or more pension scheme definitions. After you select a scheme definition and choose to apply its default values, the existing criteria are displayed, but you can amend the details to reflect the exact terms of the contributions for the employee and employer.

In some instances, you might decide to define a generic scheme, for example, to represent personal scheme contributions. The scheme definition might contain limited details because there are few instances when two employees’ contributions are the same, but they are at least grouped under a single type of scheme.

Pension Scheme

Select a pension scheme from the drop-down list.

You can set up the definitions of the pension schemes displayed in this drop-down list by using Payroll > Module Setup > Pension Scheme.

Description

This field can display the description set up in the definition of the pension scheme, but you can change it by typing a different description. The description is used in reports and payslips.

Status

Select one of the following to set the status of the pension record for the selected employee:

  • Active — pension contributions can be deducted from the employee’s pay, to contribute to the pension scheme.
  • Closed — set this status rather than delete a pension record for an employee. This means pension contributions are not calculated or paid. If you set the status to Closed, you should set a date in the To field. You then have an historical pension record for the employee.
  • Eligible – Opted Out — pension contributions are not paid.

Employee Reference

Type a reference for the employee for this pension scheme, which can be used in queries, analysis reports, and enquiries.

If there is a value set in the Pension Code – Employee field in the pension scheme definition, this field displays that value, but you can change it.

Employer Reference

Type a reference for the employer, which can be used in queries, analysis reports, and enquiries.

If there is a value set in the Pension Code – Employer field in the pension scheme definition, this field displays that value, but you can change it.

From

Type, or click to select, the proposed date from which the pension contributions start.

To

Type, or click to select, the end date, after which the pension contributions cease.

Planned End

Type, or click to select, the planned end date.

The Planned End date is purely for memorandum information. The date has no operational control within the system.

Employer: Percent, Value

In Percent, type the percentage the system uses to calculate the amount contributed by the employer for the selected scheme. The default value set in the Percent field for Employer in the pension scheme definition is initially displayed, but you can change it.

In Value, type the amount contributed by the employer for the selected scheme. The default value set in the Value field for Employer in the pension scheme definition is initially displayed, but you can change it.

Typically, you specify either a percentage deduction or a fixed value, but you can enter both (in exceptional circumstances).

If a specific value is required in a single pay period, you can amend the criteria of the scheme for that pay period and then change back the employee’s scheme definition for subsequent pay periods. Alternatively, you can use Pension Overrides to specify override values that replace the standard contribution values for the current period only.

Employee: Percent, Value

In Percent, type the percentage the system uses to calculate the amount deducted from the employee’s pay. The default value set in the Percent field for Employee in the pension scheme definition is initially displayed, but you can change it.

In Value, type the amount contributed by the employee. The default value set in the Value field for Employee in the pension scheme definition is initially displayed, but you can change it.

Typically, you specify either a percentage deduction or a fixed value, but you can enter both (in exceptional circumstances).

Note that  if the rate type of the pension scheme is Contribution Bands, and Band Method in the pension scheme is set to Each Calculation, the next run of the payroll calculation overrides the percentage you specify in this field.

When you create a a new pension record for an employee, the employee percentage rate is initially set in the Percent field by using the default value set for the employee percentage in the pension scheme. If the rate type of the pension scheme is Standard Rates, the percentages default to the percentages set in the pension scheme. If the rate type is Contribution Bands and Band Method is set to Each Calculation, there is no point in setting defaults. If the rate type is Contribution Bands and  Band Method is set to Fixed Update, the system uses the employee’s current salary to determine the percentage from the pay bands set up for the pension scheme.

If a specific value is required in a single pay period, you can amend the criteria of the scheme for that pay period and then change back the employee’s scheme definition for subsequent pay periods. Alternatively, you can use Pension Overrides to override (replace) the standard contribution values for the current period only.

Voluntary Amount: Percent, Value

In Percent, type the percentage for voluntary contributions paid by the employee.

In Value, type the amount for voluntary contributions paid by the employee.

Jane Systems recommends that you specify employee’s voluntary amounts separately from the employee percentage (EmployeePercent), by using the Voluntary Amount Percent field, rather than combine any voluntary amount percentage with the employee percentage. This is because when you update a pension scheme definition and make a change to the employee percentage, and confirm that employees’ pension records must be updated with the changed values, the employee percentage in the pension record is updated, overwriting the previous value. For example, if an employee’s typical percentage is 6%, but the employee chooses to pay 8%, it is better to specify 6 in the Employee Percent field and 2 in the Voluntary Amount Percent field, rather than specify 8 in the Employee Percent field.

Fixed

Select Yes or No from the drop-down list.

The field defines whether the employee’s pension record can be updated automatically by the system in the following circumstances:

  • When you update a pension scheme definition and confirm that employees’ pension records that refer to the pension scheme must be updated with the changed values in the pension scheme definition.
  • When you use the Pension Rate Changes wizard.

If you select No or leave the field blank, the values in the pension record are updated when the events described above occur.

If you select Yes, the pension record cannot be updated when the events described above occur. If you need to make changes, you can edit the record.

Band Reference

This field is available only when Rate Type in the pension scheme is set to Contribution Bands. You must set a band reference in the employee’s pension record by using this field only when the band reference for the employee differs from the band reference set in the pension scheme.

Select one of the following, to determine the value the system uses to determine the band:

  • Pensionable PaySelect this to use the employee’s pensionable pay to determine the pay band. This setting means that the employee’s pension is based on the employee’s actual pensionable pay.If an employee decides they do not want to pay contributions based on the WTE for the pension scheme, you can override the setting of WTE in the pension scheme by selecting Pensionable Pay in this field.
  • WTESelect this method to use the whole time equivalent (WTE) to determine the pay band. This setting means the employee’s pension is based on the full-time salary for the activity that the employee performs, rather than the actual pensionable pay. For example, if an employee works two days a week, and earns £1000 a month (£12,000 a year), their WTE is £2500 a month or £30,000 a year.

Employee Pensionable Gross Pay

Type a value for the employee’s pensionable gross pay.

NI Category

Select the NI category for the employee from the drop-down list.

When you create or remove employee associations with a pension scheme, you might need to change the NI category.

When you save the details of a pension record and this field is not set to category D, a message is displayed that asks you if you want to set the category to D.