Within Paycircle, pension contributions will be calculated based on the pension scheme and group to which a team member is assigned. Some companies however, may wish to calculate pension contributions manually, or choose to add Additional Voluntary Contributions (AVCs) to team members.
In these situations, Paycircle comes with a set of specific pension pay elements which can be used to add contributions or refunds.
The pay elements available for use are:
Pension
Pension %
Employee Pension AVC
Employers Pension
Employers Pension %
Employer Pension AVC
Pension Refund
Employers Pension Refund
Tax treatment of pay elements
By default, pension pay elements will inherit the tax treatment of the pension scheme or group the team member is assigned to. For example, if the team member is in a Relief at Source (RAS) pension scheme, the pension pay elements will use RAS settings, and if the team member is in a Salary Sacrifice (SS) pension group, the element will pick up SS settings.
Pay elements with multiple pension schemes
If the team member belongs to multiple pension schemes, you will also need to specify the pension scheme when using a pension pay elements to add a change. This is to ensure the contributions or refunds are assigned to the right scheme, and that the right tax treatment is applied to the element.
Pay elements for Relief at Source (RAS) pension schemes
Relief at source means contributions are taken from an employees pay after tax. When using a pension element for an employee within a RAS pension scheme, you will need to input the full contribution value, inclusive of tax, and not the net of basic rate (BR) amount. Paycircle will then handle the calculation.
e.g. A team member is part of a Relief at Source pension scheme and the manual ‘Pension’ value is £100.00. Paycircle will take care of the BR tax split, and deduct £80.00 from the team member.
Pension AVC elements for Relief at Source (RAS) pension schemes
When utilising an AVC pension element for a team member within a RAS scheme, you will need to input the full contribution value, inclusive of tax, and not the net of basic rate (BR) amount. Paycircle will then handle the calculation. It is important to note that the reduction for BR tax associated with the AVC value will be applied to the team member’s standard contribution for that period.
e.g. A team member is part of a RAS pension scheme, and has a standard contribution value of £152.50. The net of BR value is £122.00, and the relief value is £30.50. The team member then contributes an AVC of £125.00. The net of BR value is £100.00, and the relief value is £25.00. The total standard contribution will then be displayed as £97.00 (£122.00 – £25.00 relief from the AVC) and the AVC will display as the full contribution value, inclusive of BR tax.