Controls

Use this tab to specify how the pension contributions are handled for tax and NI purposes. You should change the settings for these fields in accordance with any statutory change notifications.

When you select Adjust TAxable Gross (Standard) and Adjust TAxable Gross (Voluntary), an employee’s pension contribution reduces their taxable pay by the amount of the contribution, therefore providing the employee with tax relief.

EMPLOYEE CONTRIBUTIONS ONLY

Adjust NI-able Gross (Standard)

Employee pension contributions are not exempt from national insurance, so this check box should be clear. This results in the NI-able gross figure for the employee not being adjusted and the national insurance contributions are calculated on the full NI-able earnings.

Adjust TAXable Gross (Standard)

Select this check box if contributions to the scheme are classed as exempt from PAYE tax payments. Employee pension contributions are exempt from PAYE, so you should select this check box to ensure that the taxable gross pay is reduced by the value of the employee’s contributions.

Adjust NI-able Gross (Voluntary)

Voluntary pension contributions are not exempt from national insurance, so this check box should be clear. This results in the NI-able gross figure for the employee not being adjusted and the national insurance contributions are calculated on the full NI-able earnings

Adjust TAXable Gross (Voluntary)

Select this check box if voluntary contributions to the scheme are classed as exempt from PAYE tax payments. The employee’s voluntary contributions are exempt from PAYE, so you should select this check box to ensure that the taxable gross pay is reduced by the value of the employee’s contributions.

PENSION CAP PROPERTIES

Use the following fields to set cap values for the pay period. You can set minimum or maximum values, but not both.

For example, if you select Value Maximum in Type, and you set Employer to 1000, this means that if the system calculates £1100 for the pay period for the employer’s contribution, the pension contributions from the employer are capped at £1000 for the pay period.

Type

Select one of the following:

  • Value Maximum — to define a set of maximum cap values.
  • Value Minimum — to define a set of minimum cap values.

Employer

Type a minimum or maximum cap value for the employer’s contribution.

Employee

Type a minimum or maximum cap value for the empoyee’s contribution.

Voluntary

Type a minimum or maximum cap value for voluntary contributions.

Employee

Maximum Gross

Type a maximum gross amount for the pay period. If an employee earns above this figure, no pension contributions are payable and the system does not attempt to calculate a pension contribution.

To ensure that the system calculates pension contributions, the software recommends you set a high value in this field (such as 1,000,000.00). Typically, you set the same maximum gross value for the employee and the employer.

Minimum Gross

Type the minimum gross amount for the pay period. If an employee earns less than the amount you specify, the system does not calculate pension contributions. For example, if you set 300 in this field, and an employee earns £250 for the pay period, the system does not calculate a pension contribution.

Employer

Maximum Gross

Type a maximum gross amount for the pay period. If an employee earns above this figure, no pension contributions are payable and the system does not attempt to calculate a pension contribution for the employer.

To ensure that the system calculates pension contributions, the software recommends you set a high value in this field (such as 1,000,000.00).

Minimum Gross

Type the minimum gross amount for the employer’s contributions for the pay period. If an employee earns less than the amount you specify, the system does not calculate pension contributions for the employer.

Earnings Reduction

Type a value for the pay period, an amount by which employees’ pay is reduced for pension contribution purposes. For example, if you enter £150, this means that the first £150 of employees’ pay in the pay period is not pensionable.