When an employee receives statutory parental or sick pay, you may need to change their employer pension contribution.

In most cases, you need to pay employer pension contributions based on their full salary, and not on the value of their statutory payments. 

You need to calculate and process this manually.

Pension contributions for an employee on statutory pay may reduce or stay the same depending on your company policy or the employee's contract.

If you operate a salary sacrifice pension scheme, your software doesn't deduct pension contributions from statutory payments, as legislation protects these payments.

Some pension schemes require the employer to cover the employee's pension contribution during the period they're on leave.

 NOTE: If you're unsure how this affects your pension scheme, contact ACAS for advice before you process.

Calculate the contribution

If you need to amend your employee's contributions, calculate the contribution first value. The calculation you need to complete depends on your pension scheme settings, the employee's pay and their contribution rates.

To help you calculate this:

• Find out about which settings are used to calculate pension contributions?
• View some pension calculation examples

If you're not certain of the employee pay amount to use in your calculation, contact your pension provider for advice.

Process the contribution

When you've calculated the required contribution, enter it in the employee's record.

1. On your employee list, double-click on the relevant employee.
2. Click the Pensions tab, then click Manage Schemes.
3. Select the relevant Pension Scheme and click Edit.
4. Note the employee's normal pension contribution rates. You must re-enter these when the employee returns to their normal pay.
5. Click on the drop-down list by Employers Contribution and change to Fixed Amount then enter the value to deduct in the value box.
6. Repeat step 5 for the Employees Contribution, if applicable.
7. Click OK and Save.

Next steps

When the employee returns to work and you pay their normal wages, you must change their contribution rates back to the correct amounts.

To do this, complete the process the contribution steps above, but enter the original contribution rates you noted in Step 4.