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Tiered pensions - Teachers, NHS and local government pensions

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Summary

How to process tiered pensions in Sage 50 Payroll.

Description

Tiered pension schemes, sometimes referred to as banded pensions, are a form of earnings related contributions. This means that your pension contribution is dictated by the band your salary falls into. The tiers state the percentage amount that you must contribute to your pension, based on your salary.

To help you process tiered pensions in Sage 50 Payroll, we've created some pension packs. These packs contain templates that you can import into your software, which then create the pension bands. These also contain a reports backup which you can restore. This creates the necessary reports without it affecting your current reports.

These packs are only available if you have Sage 50 Payroll Pensions Module.

NOTE: Do you operate a tiered NHS pension scheme? If you do, our Pensions Module contains an option for you to automatically process your employees' NHS pension contributions. This includes assessing, maintaining and periodically re-assessing tiers for employees, as well as defining and calculating pensionable pay for specific groups of employees. Find out more about NHS pensions > 

Resolution

Table of Contents

Tiered pension schemes are common in the public sector, for example:

  • NHS, including hospitals, GP and dental practices
  • Education, including schools, colleges and academies
  • Local government pension schemes (LGPS), including town and parish councils

Background information

NHS and Teachers' pensions have operated tiered pensions for a number of years and the tiers are updated each year. Under NHS and Teachers' pension schemes you assess at the start of each year and your annual salary dictates which tier you belong to. The only time your tier changes is if your circumstances change.

LGPS tiers were first introduced in April 2014, with these:

  • An employer can choose to change the tier you belong to each time you're paid, rather than assessing you once a year.
  • An employee can choose to make 50% contributions instead of 100% for a period of time and the employer must record these changes.

Local government pension scheme (LGPS)

For more information about LGPS, please visits the LGPS website - www.lgps.org.uk. You can view the bands and rates for the scheme at http://www.lgps2014.org/content/what-will-new-scheme-cost-me

The LGPS pension CSV import template contains the following file:

  • PensionSchemesLGPS.CSV - Import template that creates the necessary pension schemes for each band. There's a separate pension scheme for each of the 18 bands, and they start with a reference of 101.

Employer contributions may differ between each region, you should check the contribution details for your region and set these correctly within each scheme. Read more >

The LGPS pension reports backup contains the following files:

  • Pension Contributions - LGPS.report - Shows a breakdown of current pay, annual equivalent, employee and employer contributions. Based on the employees’ earnings, it shows whether this is the correct band and if not, recommends the required pension band for each employee.
  • SSP Payments - LGPS.report - Shows any employees who are receiving statutory sick pay (SSP) in the current period. If their pay has been reduced while they’ve been on SSP, you're required to make a notional payment of the difference between what they have received and what they would have received if not on SSP. You should then make a manual amendment to the employee's pension contribution to ensure a full contribution is made.
  • Section Movement - LGPS.report - Shows contribution details for employees who've switched from the main section, 100% contributions, to the 50/50 section, 50% contributions. You should inform your pension provider of these changes.
  • Pension Contribution Breakdown - LGPS.report - Shows a breakdown of contributions over the specified period.

     

NHS

For more information about NHS pensions, please refer to the NHS pension website - www.nhsbsa.nhs.uk/pensions

The NHS pension CSV import template contains the following file:

  • PensionSchemesNHS.CSV - Import template that creates the necessary pension schemes for each band. There's a separate pension scheme for each of the 7 bands, and they start with a reference of 101.

The NHS pension reports backup contains the following reports:

  • Pension Contributions - NHS.report - Shows a breakdown of current pay, annual equivalent, employee and employer contributions. Based on the employees' earnings, it shows whether this is the correct band and if not, recommends the required pension band for each employee.
  • Pension Contribution Breakdown - NHS.report - Shows a breakdown of contributions over the specified period.

NOTE: Alternatively, if you subscribe to the Pensions module, you can use this to set up and process NHS Pensions. Read more > 

Teachers' pension

For more information, please visit the teachers' pension website - www.teacherspensions.co.uk

The teachers' pensions CSV import template contains the following file:

  • PensionSchemesTeachersApril20223.csv - includes the required data to set up the 6 tiered pension schemes when you import it.

NOTE: The CSV file uses references 1-6 by default. If they're not changed this will overwrite any existing pension schemes with these references.

The teachers' pension reports backup contains the following reports:

  • Pension Contributions - Teachers' Pension.report - Shows a breakdown of current pay, annual equivalent, employee and employer contributions. Based on the employees’ earnings, it shows whether this is the correct band and if not, recommends the required pension band for each employee. This is a pre-update report.
  • Pension Contribution Breakdown - Teachers' Pension.report - Shows a breakdown of contributions over the specified period. This is a post-update report.

All reports appear in the User Defined (Local) folder in the software.

Download pension packs

  1. Access the required link below.
     NOTE: You must log in to view this page. To do this, enter your email address and password for the Sage website, then click Log in.
  2. Click Download.
  3. From the File Download window, to save the update to your computer, click Save.
  4. From the Save As window, browse to and select the required destination, for example your Windows desktop or your Downloads folder, then click Save.
  5. Once the download is complete, click Close.


LGPS

Access the below links for the LGPS reports and import template:


NHS

Access the below links for the NHS reports and import template:


Teachers pensions

Access the below links for the teachers' pension reports and import template:

Import the CSV file

  1. Click File, then Data Import.
  2. Click Import Sage Payroll Data.
  3. To take a backup of your data, click Backup, then follow the on-screen instructions.
     TIP: Take a backup means that, if required, you can remove the imported data by restoring the backup.
  4. Select Company Pensions Scheme, then click Next.
  5. Click Browse, then browse and locate the import file.
  6. Select the import file, then click Open. 
  7. Ensure the Path box displays the correct file and location of the import file, then click Finish.
  8. Click Close.

For more information on how to import data, visit our import data guide.

You must now assign the correct pension scheme to your employees based on the relevant band. For help assigning the schemes, visit our add a pension scheme to an employee's record guide.

Restore the reports backup

  1. Click File, then Restore, then Next.
  2. Deselect Data Files, select Reports Files, then click Next.
  3. Click Browse, then browse and locate the reports backup file. 
  4. Select the backup file, then click Open.
  5. Click Next, then Finish.

Once the restore is complete you need to enter your normal Sage 50 Payroll login details.

Run the reports

Pension Contribution Breakdown

This report is a post update report. This means you should run it once you've updated the pay period.

  1. Click Reports, then User Defined (Local).
  2. Highlight the 'Pension Contribution Breakdown' report, then click Preview.
  3. Enter the required data range for your report.
  4. Click OK.

Other reports

The other reports in the pack are pre update reports. This means you should run them before you update the current period.

  1. On your employee list, highlight the required employees.
  2. Click Payroll, then Pre-update reports.
  3. Click User Defined (Local).
  4. Highlight the required report, then click Preview.

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