Pension Contributions (United Kingdom)
Kwik-Pay provides examples of a number of different types of pension contributions. The examples can be copied and you can have any number of pay items defined to manage contributions to different pension schemes.
Compulsory Employee Deduction
For a compulsory employee contribution, add the 'Pension employee contribution' pay item to the employee details screen, standard pay tab. If the employee makes a fixed lump sum contribution each pay period, enter the amount to be deducted in the cash override field. If the employee's contribution is based on a percentage of the pensionable pay, you can either enter the percentage rate in the factor field of the pay item edit screen if every employee has the same percentage rate, or if the percentage rate varies by employee, enter the percentage rate in the standard pay item factor field. Note that if there are groups of employees with the same percentage rate, you can copy the existing pension pay item and create a separate pay item for each common percentage rate. You can copy a pay item in the pay items list form.
Additional Employee Voluntary Contributions
For an additional employee voluntary contribution, add the 'Pension employee additional contribution' pay item to the employee details screen, standard pay tab. If the employee makes a fixed lump sum contribution each pay period, enter the amount to be cash override field or if the employee contribution is based on a percentage of pensionable pay, enter the percentage rate in the standard pay factor field or pay item factor field.
Additional Free Standing Employee Voluntary Contributions
There is a separate pay item defined for free standing additional employee voluntary contributions. Add the 'Pension employee free standing AVC' pay item to the employee details screen, standard pay tab. You have the choice of entering a fixed cash amount to be deducted n the cash over-ride field, or a percentage rate in the factor.
There is an additional example pay item 'Pension employee free standing AVC net' where the contribution amount is reduced by the amount of basic rate tax due on the contribution.
Personal Pensions or Group Personal Pensions
For a personal pension or group personal pension contribution, add the 'Pension employee personal pension' pay item to the employee details screen, standard pay tab. You have the choice of entering a fixed cash amount to be deducted n the cash over-ride field, or a percentage rate in the factor.
There is an additional example pay item 'Pension employee personal pension net' where the contribution amount is reduced by the amount of basic rate tax due on the contribution.
Contracted Out Money Purchase Scheme
Example pay items are provided for both employer and employee contributions to a contracted out money purchase scheme. The pay items require the results of calculations made by the NI pay items in Kwik-Pay and affect the PAYE calculation, so the contracted out money purchase pay items must have a priority that place them between NI employee and employer pay items and PAYE pay item. If the contracted out money purchase pay items are not in the correct pay item sequence, they will not calculate correctly.
When adding the contracted out money purchase pay item to the employee's standard pay tab, both the cash over-ride and factor should be left blank as the amount is calculated by Kwik-Pay.
Stakeholder Pensions
As with other pension contribution pay items, you have the option of entering a fixed amount to be deducted each pay period, or a percentage rate, and there are versions that calculate a gross amount or an amount reduced by the basic tax rate.
Where there is insufficent net pay to deduct an employee Stakeholder pension contribution, the default behaviour in Kwik-Pay is to not make the deduction, although the default behaviour in Kwik-Pay for other deductions is to reduce the amount of the deduction until the net pay is zero, or thee is a minimum level of net pay remaining. The employee Stakeholder pension contribution pay item has a property 'DoNotReducePayItem' which causes Kwik-Pay to not make the deduction at all if there is insufficient net pay to take the full amount of the deduction.