How to handle employer pension contributions for employees receiving statutory parental pay

How to process employer pension based on an employee's normal pay while they're on statutory parental pay in Sage 50 Payroll.

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

Typically, you need to pay employer pension contributions based on their full salary, not their statutory parental pay. 

You need to calculate and process this manually.

The exact contributions you need to process for an employee receiving statutory parental pay comes down to:

• Legislation
• Your company policy
• The employee's contract

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

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

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

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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 your software uses in pension calculations
• 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.

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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.
   
   NOTE:

   Keep this note safe, as you need to re-enter these when the employee returns to their normal pay.

5. Set the Employer Contribution dropdown to Fixed Amount.
6. Enter the employer contribution amount in the field to the right.
7. Repeat step 5 for the Employee Contribution, if applicable.
8. Select OK then Save.

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Next steps

When the employee returns to work and you pay their normal wages, 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.

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