Salary sacrifice pension arrangements mean that the employee no longer contributes directly to their pension scheme. The employer contributes at least the amount sacrificed by the employee and can also make their own contribution. For further information about salary sacrifice pensions, please refer to the HMRC website.
Set up salary sacrifice pension scheme - Click the Company then Pension Schemes.
- In the Enrolment Review Date box, enter the date you next need to review your pension schemes for automatic enrolment.
 NOTE: This is for information only in Sage 50 Payroll. If you're unsure what to enter, contact your pension provider. - Select a pension scheme to set up, then click Edit.
- Complete the fields in the Details tab. To details of each field, click here >
| Reference | The pension scheme reference is a number used to identify the scheme. | | Description | Enter a name for your pension scheme here, using a maximum of 30 characters. | | Type | From the drop-down list, click the type of scheme. | | SCON | You don't need to enter anything in here as the scheme contracted out number (SCON) is no longer required. | | Qualifying Scheme | If the scheme meets The Pension Regulators criteria to be an automatic enrolment pension scheme, select this check box. | | Use Qualifying Earnings for pensionable pay | To calculate pension contributions using qualifying earnings thresholds, select this check box. For more information on qualifying earnings, read more about What is used to calculate pension contributions > | | Scheme minimum contribution (Total of Ee and Er) | This updates automatically if you enter a value in the Minimum Contribution (period) boxes on the Employee and Employer tabs. | | Minimum Employment Period (Months) | If the scheme is a qualifying scheme for automatic enrolment, leave this section blank. You need to postpone the employees instead to apply a minimum employment period. | | Salary Sacrifice Scheme | Select this check box. | | Stakeholder Friendly | This check box is only available if you choose a COMP or COMB type of scheme. If your pension scheme has stakeholder rules applied to it, select this check box. |
Check your pay elements You must ensure that you've correctly set your pay elements to be included in the pension calculation as required. - Click Company, then click Pay Elements.
- Select the checkbox This payment is subject to Salary Sacrifice (Pension Only) for each required pay element.
NOTE: Factored pay elements can't be included in Salary Sacrifice pension calculations. To be compliant with the national minimum wage (NMW), the employee should not sacrifice an amount that reduces their gross pay below the NMW.  TIP: If your employee also has a salary sacrifice deduction, for example Cycle to work, Sage 50 Payroll calculates the pension contribution using the pensionable pay before the deducting the other sacrifice arrangement.
Assign the pension schemeIf you use the Pensions Module, you can process the employee's next payroll as normal. When you run the Pension Assessment, it enrols eligible employees. If you don't use the Pensions Module and need to assign the pension scheme manually, follow our guide to add a pension scheme to an employee's record.
Process the employee's pay - The Payments window displays the amount of their normal salary.
- The bottom line displays the amount of the salary sacrifice and the employee's gross pay reduces accordingly.
- In the Summary tab the columns beside Pre-Tax Payments, Taxable Gross Pay and Total Gross Pay display the reduced amount.
- The Employer's window displays the sacrificed amount of the employee's pension and if applicable, includes the amount of the employer's contribution.
Click here to view an example > An employee has a monthly salary of £2500 and decides to sacrifice 10% of this to the pension scheme. The employer also decides to contribute 10% to the pension scheme. This means that the employee's gross pay reduces by £250 and the employer also contributes £250 making a total pension contribution of £500. In Enter Payments, the following values appear: - The Payments window displays the normal salary of £2500.
- The bottom line displays £250 for the salary sacrifice and £2250 for the employee's gross pay.
- The Summary window displays £2250 in each of the columns beside Pre-Tax Payments, Taxable Gross Pay and Total Gross Pay.
- The Employer's window displays £500 beside Pension (Current).
The payslip displays: - The employee's normal salary, for example £2500.
- Salary Sacrifice as a negative amount, for example, -£250.
- Earnings for NI for the reduced amount, for example, £2250.
- Gross for Tax for the reduced amount, for example, £2250.
- Total Gross Pay for the reduced amount, for example, £2250.
The employee's normal salary is known as their referenced salary and pension reports include this information. Any legislative reports that show the gross pay, for example, P11 Deduction Card (PAYE Details), show the post sacrifice amount, for example, £2250. [BCB:257:UKI - Personal content block - John:ECB] [BCB:137:Limitless - 50 Payroll - Pensions:ECB]
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