Posted on

August 25, 2018

How to set Employer and Employee workplace pension contributions

  1. Paycircle's default setttings

    Paycircle’s default pension setting option is set at the standard minimum contributions set by the government and The Pensions Regulator.

    In 2018 these contributions are 2% for employers and 3% for employees.

    From April 2019 these go up to 3% for employers and 5% for employees.

    The contributions are based upon an employee’s Qualifying Earnings. This means the employee’s pensionable pay is calculated on anything they earn above £503 and below £3,863 per month and includes overtime, bonuses, commission, holiday pay and statutory payments like maternity pay.

    If you set up a pension on Paycircle and do not make any changes to the way the pension is set up for your company or your employees, these are the default settings that will be applied.

    If you set up Pension Groups with different percentages when you set up your workplace pension with your provider, these Pension Groups will also be set up in Paycircle when you connect your workplace pension for the first time. These setting would override the Paycircle default settings and you can associate your employees into any of the Groups that you have already set up.

  2. Changing pension contribution percentages

    If you have Pension Groups set up with your workplace pension provider, you can change your employees contribution percentages by associating them with one of the Groups that you have set up that already have different contribution percentage settings.

    If you do not have any Pension Groups set up with your workplace pension provider and you want to change your contribution percentages, you will need to do this on an employee by employee basis.

    Adding employees to Groups and changing their percentage contribution settings is easy on Paycircle. Head to the Team area in Paycircle and select the person whose contribution percentages you want to change. In their profile area, head to the Pensions tab. Click on the Pensions Contributions adjuster on the right hand side to open up the window to adjust the percentage contributions.

    You can adjust these percentages to whatever you have agreed with your employee. Do be aware that you can adjust these contributions to below the minimum contribution levels set by The Pensions Regulator but if you do this, your pension scheme may no longer be compliant. If your employee wants to stay in the pension scheme but contribute less than the minimum contribution level then they may need to opt out of the pension first and instead make voluntary contributions to their pension. If the employee opts out first then your company workplace pension would remain compliant.

    The Pensions Regulator are looking at introducing something called ‘opting down’. Where an employee can contribute less than the minimum contribution level but where the scheme remains compliant for the employer. If your employees are requesting to contribute less you may want to talk to The Pensions Regulator before you change their percentage contribution settings.

  3. Changing payroll contributions from percentages to fixed amounts

    If you want to change your contribution percentages to fixed contribution amounts, you will need to do this on an employee by employee basis in Paycircle.

    Head to the Team area in Paycircle and select the person whose contribution percentages you want to change to fixed amounts. In their profile area, head to the Pensions tab. Click on the Pensions Contributions adjuster on the right hand side to open up the window to adjust the percentage contributions.

    From here, you can move the slider from percentages to fixed contributions and enter the fixed contribution amount for each pay period.

    You can set these fixed contributions to whatever you have agreed with your employee. If you adjust the contributions to below the minimum contribution levels set by The Pensions Regulator your pension scheme may no longer be compliant. If your employee wants to stay in the pension scheme but contribute less than the minimum contribution level then they may need to opt out of the pension first and instead make voluntary contributions to their pension. If the employee opts out first then your company workplace pension would remain compliant.

    The Pensions Regulator are looking at introducing something called ‘opting down’. Where an employee can contribute less than the minimum contribution level but where the scheme remains compliant for the employer. If your employees are requesting to contribute less you may want to talk to The Pensions Regulator before you change their contribution settings.

Was this user guide helpful?

Top