Your workplace pension scheme

Every UK employer must assess its workforce each pay period, automatically enrol eligible workers into a qualifying pension scheme, and pay minimum contributions.

Go to Tax, then Payroll, and choose Pension scheme. You can also reach it from Settings.

Set the scheme up before your first pay run of a tax year. Once a month has been run, some of these choices are fixed for the rest of the year.

Your provider

Pick your provider, or Another provider if it is not listed. Kontala produces a PAPDIS file, which is an open standard far more providers accept than can be listed, and the file is identical either way.

What contributions are worked out on

The basis is the choice; the percentages follow from it:

• Qualifying earnings - contributions are worked out on the slice of pay between the lower and upper limits, not on all of it. This is the statutory default and what most employers use.
• Basic pay (set 1) - basic pay only, excluding overtime, bonus and commission. Because that base is narrower, the minimum percentages are higher.
• Basic pay (set 2) - basic pay again, but you may only certify on this set while basic pay is at least 85% of total earnings across your workforce.
• All earnings (set 3) - everything the worker earns. The widest base, so the lowest minimum percentages.

The two percentages

Enter the employer and employee percentages.

These are the percentages that go into the pension - not necessarily what comes off the worker's pay.

Kontala checks two things against the statutory minimum for the basis you picked, and refuses a scheme that fails either:

1. The total must reach the floor.
2. The employer must pay at least its own share. A worker paying the whole amount while the employer pays nothing does not qualify.

The floors differ by basis, and Kontala states the one that applies as you switch.

How tax relief is given

This changes the figures, not just the paperwork:

• Relief at source - taken from pay after tax. The provider claims basic-rate relief back from HMRC, so payroll must not give it again. This is how NEST, NOW: Pensions and The People's Pension all work. Because HMRC pays part of it, less comes off the worker's pay than goes into their pension - Kontala shows the split in your own figures.
• Net pay arrangement - taken from pay before tax, so the worker gets full relief immediately through payroll. It does not reduce National Insurance.
• Salary sacrifice - the worker gives up the pay before earning it, so it reduces both tax and National Insurance. They make no contribution of their own, and the whole amount is reported as the employer's.

Under salary sacrifice only, you can choose to reinvest the employer's National Insurance saving into the pension.

Postponement

You can defer enrolment for up to three months from each worker's start date.

Workers are still assessed and still appear on the provider file throughout. What is deferred is enrolling them and paying in.

Set it to zero to assess and enrol from the first pay run.

After it is set up

Every pay run assesses each worker against the thresholds, enrols those who qualify, and calculates both contributions onto the payslip.

The Pension members report under Reports lists who is in the scheme.

Related

• Prepare a pay run
• Payslips
• Set up payroll