Tips & Tricks

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How to set up Salary Sacrifice for Pensions

 

In this article it is described how to set up salary sacrifice in Opera 3 for pension contributions.

 

You can set up value-based salary sacrifice payments for employees who agree to give up some of their contractual cash pay in return for non-cash benefits. Value-based salary sacrifices can be set up either for a pension contribution or for other types of contribution, for example child care vouchers or the Cycle to Work scheme. When Advanced Pensions Processing is in use you can also set up percentage based salary sacrifice pension payments so that salary sacrifice payments are calculated automatically.

This can be financially beneficial to both you the employer and also to the employee because of lower Income Tax and National Insurance contributions. If the employee's pay is subject to an attachment order you should contact HMRC to check whether their attachable pay is affected.

This is not a deduction from pay but rather an agreement to give up part of cash pay in return for non-cash benefits. They are displayed as a negative payment (not a deduction) on both the Payments tab of the Payroll > Processing > Pay & Deductions form and on the employee's payslip.

 

1. Open the Payroll folder and then click Maintenance or click the Payroll & HR tab on the Ribbon Bar and then clickPayroll - Maintenance.

 

 

 

2. Maintain the pension scheme/s:

  

1. Click Pension Scheme.2. Create a new pension scheme or locate the first existing affected scheme using the List tab or by pressing CTRL+F to search for the record.

3. Select the Salary Sacrifice box on the General tab and consider these related options (select if required):

 

a)Calculate Employer's Contribution on Post-Sacrifice Pay if your contribution must be calculated after the employee's salary sacrifice has been deducted.

b)Add Employer's NI Saving to Contribution if you are going to contribute all or some of your NI saving to the employee's pension

4. Update the other boxes as necessary.

5. To save the record, click the  icon "Save" on the toolbar or press CTRL+S.

6. Repeat for each relevant pension scheme. Then close the form.

 

 

3. Maintain the payment profile/s:

1. Click Payment Profile.

2. Create a new profile for salary sacrifice or locate the first existing affected payment profile using the List tab or by pressing CTRL+F to search for the record.

3. On the General tab enter a description, leave the Type box blank and set the Taxable and NI'able boxes as necessary - depending on whether the Income Tax and

National Insurance contributions will be reduced by the salary sacrifice payment.

4. Select the Salary Sacrifice box and choose 'Pension'. If Advanced Pensions Processing is in use you must also enter a pension scheme.

5. To save the record, click the  icon "Save" on the toolbar or press CTRL+S.

6. Repeat for each relevant payment profile. Then close the form.

 

 

 

4. Maintain the deduction profile/s:

1. Click Deduction Profile.

2. Create a new profile for the employer's pension contribution or locate the first existing affected payment profile using the List tab or by pressingCTRL+F to search for the record.

3. On the General tab:

a) Enter a description and select 'X' in the Type box list.

b) If Advanced Pensions Processing is in use enter a pension scheme.

c) Select the other boxes and options as required.

4. To save the record, click the  icon "Save" on the toolbar or press CTRL+S.

 

5. If you are going to be contributing the employer National Insurance savings to employees' pension contributions as a 'top-up':

a) Create another profile for the employer's pension contribution top-up.

b) Enter a deduction code and description and select 'X' in the Type box list.

c) If Advanced Pensions Processing is in use select the same pension scheme as above.

d) Select the Er's Salary Sacrifice NI Saving box.

 

6. To save the record, click the  icon "Save" on the toolbar or press CTRL+S.

7. Then close the form.

 

5. To assign employees to new pension schemes, use any of these commands:

 

  • Payroll - Processing - Pensions - Employee Pensions

  • Payroll - Processing - Pensions - Auto Enrolment Details

  • Payroll - Global Changes - Auto Enrolment Updates

  • Payroll - Global Changes - Pension Scheme Transfer.

 

Note: The salary sacrifice setting for each employee will be [...]

 

 

You can find the full version of this article in our Support Portal. Click here


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