Pension Schemes

This screen is used to create and maintain details about pension schemes to which employees and the organisation may make payments.

Please note, Liberty Accounts recommend you take appropriate professional advice to fully understand the nature of the pension scheme and the obligations with respect to National Insurance Charges.

Active

If the switch is moved to inactive the pay element will be considered inactive. and will not appear in payroll element drop-down lists.

Pension Scheme

Enter a unique descriptive name for the pension scheme. This is a mandatory field.

Deductions Regime

The pensions industry refers to schemes as either 'Net Pay' or 'Relief at Source'.

Under 'Net Pay' schemes contributions are taken from pay before it is taxed. This means full tax relief is given, no matter if you pay tax at the basic, higher or additional rate. The amount on the payslip is the contribution plus the tax relief.

Under 'Relief at Source' schemes contributions are taken after taking tax and National Insurance from the pay. However much is paid, the pension provider then adds tax relief to the pension contribution at the basic rate. The amount on the payslip is only the contribution deducted from pay, not the tax relief.

Your pension scheme provider will tell you which type of scheme you are using. It is important that this is set correctly.

For auto-enrolment schemes you also have the option to restrict deductions to the auto-enrolment thresholds. Your use of this option will depend on the agreement you have with your employees.

Restrict Deductions to Auto-Enrolment Thresholds

For auto-enrolment schemes you also have the option to restrict deductions to the auto-enrolment thresholds. Your use of this option will depend on the agreement you have with your employees.

For a workplace pension scheme that is to apply the lower and upper qualifying earnings limits, tick the Restrict deductions to Auto-Enrolment thresholds box. Note any changes to the thresholds will be maintained by Liberty accounts.

Pension Scheme Provider

Select the scheme provider from the dropdown list. This is used to control the output of a pension contribution schedule file which can be sent to your pension provider. If the format for your provider is not supported we can add usually add the format if you can provide a file format specification from your provider.

Pension Data Export Group

Where you have set up multiple schemes for the same provider this allows you to enter a text label common to all the schemes that need to be grouped together in a single contribution schedule export file.

Employer Reference

Your pension provider should provide you with a unique reference for your organisation. Note for a NEST scheme the reference will commence with 'EMP' followed by nine digits.

Employee Pension Contribution

Choose how pension contributions by the employee will be calculated. Select either Percentage or Fixed Amount. The percentage will be applied to the sum of those pay elements indicated to be included in the Pensionable Gross.

Employee Contribution Rate/Amount

Enter either the percentage amount as 6.50 or an amount such as 75.00 to achieve the desired level of deductions. N.B. if you are using a 'Relief at Source' scheme you may need to adjust the contributions down to allow for the tax relief claimed by the pension provider for the employee. This will depend on the agreement you have with your employees regarding their contributions.

Employer Pension Contribution

Choose how pension contributions by the employer (if any) will be calculated. Select either Percentage or Fixed Amount. The percentage will be applied to the sum of those pay elements indicated to be included in the Pensionable Gross.

Employer Contribution Rate/Amount

Enter either a percentage to be used to calculate the deduction e.g. 6.5 for 6.5% or enter an absolute amount to use, irrespective of earnings, e.g. 75.00 for £75.

Pension Expense Account

Select from the dropdown box the relevant expense account to which any employers pension contribution will charged.

Pension Liability Account

Select from the dropdown box the relevant liability account to which the employees and employers (if any) pension contribution will be accumulated until paid to the pension provider.

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