Add a custom pension scheme

Before you start

Before you can set up your pension scheme in Sage Payroll, you need certain bits of information.

It is really important to get these, so the pension calculates correctly for your employees.

To find this information, you should contact your pension provider.

You will need the following details:

• The name, employer reference and address of your pension provider.
• The type of contribution. Whether it is salary sacrifice, deducted before tax or deducted after tax.

• The type of deduction. Whether it is a percentage or fixed amount.

• The employee and employer contribution percentages or amounts.

• Your earnings basis. For percentage contributions, whether it is based on pensionable pay, qualifying earnings or custom earnings.

• Your contributions payment date. When you pay your pension contributions to your pension provider.

After you've gathered all the information you need to accurately set up your custom pension, you can add it to Sage Payroll.

How to set up a custom pension scheme

1. Select Pensions, then Add a new pension, and Add your own pension.
2. Enter the name, Employer Reference and address of your pension provider.

3. Select Add Group and complete the relevant fields from the table.

   Group name	Enter a name for this plan.
   Type of contribution	Choose the type of contribution you have with your pension provider. Salary sacrifice - The money paid into the pension is taken from your employee's gross pay before tax and National Insurance is calculated. Note: If you choose Salary sacrifice, the employee contribution is shown as a negative payment on the payslip. Contribution deducted before tax - The money paid into the pension is taken from your employee’s gross pay, before tax is calculated. Taxable gross pay is reduced by the amount of the pension contribution, therefore your employee does not pay tax on this contribution. Contribution deducted after tax - The money paid into the pension is deducted after tax is calculated, and the pension provider claims back the Basic Rate tax paid on this contribution, direct from HMRC.
   Type of deduction	Choose whether the rates are a percentage of the employees’ pay or a fixed amount.
   Employer Contribution	Enter the percent or fixed amount you pay into the pension scheme.
   Employee Contribution	Enter the percent or fixed amount your employee pays into the pension scheme.

4. Select Next and complete the relevant fields from the table.

   Earnings Basis	If you chose a percentage deduction, choose one of the following options: Pensionable Pay – All payments that you’ve selected the Pension Earnings check box for are included in the pension calculation for that pay period. Qualifying Earnings – All payments that you’ve selected the Qualifying Earnings check box for are included in the pension calculation for that pay period. Custom Earnings Basis – To specify your own thresholds for pension contributions, choose this option. You can then specify an annual lower and upper earnings limit. When you process your pay run, Payroll automatically adjusts the thresholds based on the pay frequency and only deducts pension on earnings between the two bands. Note: These options are not available for Salary sacrifice contributions.
   Annual lower earnings limit (£)	This option only appears if you chose Custom Earnings Basis. Enter the annual lower earnings limit for your pension.
   Annual upper earnings limit (£)	This option only appears if you chose Custom Earnings Basis. Enter the annual upper earnings limit for your pension.
   Contributions payment date	Select the date you pay the pension contributions to your pension provider.
   Default plan (optional)	To automatically enrol all employees into this pension scheme, select this check box. You can change this for individual employees when you process their pay run.

5. Select Save. You can repeat the process to add more groups if required.
6. Select the Qualifying Scheme check box.
7. To read the terms, select the our terms link. Then to accept them, select the Terms check box.
8. Select Save.

Next steps

If you already use Sage Payroll and have set up a new pension, you need to add your employees to the scheme

If you have set up pensions as part of an FPS import, you can now continue the FPS import process

You can run a pension contributions report in Sage Payroll. Depending on your pension provider, you may be able to use this to manually enter your pension data on their online template, or save it as a file and upload it.