Add a custom pension scheme

If you have chosen your own pension scheme for your employees, you can set this up in Sage Payroll.

 NOTE: Once your pension scheme is created, it can be edited but not deleted.

Correct information is crucial, to ensure accurate pension calculations for your employees.

To find this information, you should contact your pension provider.

You'll need the following details:

• The name, employer reference, and address of your pension provider
• The type of contribution. Whether it's salary sacrifice, deducted before tax or deducted after tax
• The type of deduction. Whether it's a percentage or fixed amount
• The employee and employer contribution percentages or amounts
• Your earnings basis. Whether it's based on unbanded earnings, banded earnings or custom earnings

 NOTE: Earnings basis does not apply for salary sacrifice pensions. 

• Your contributions payment date. When you pay your pension contributions to your pension provider

After you've gathered all the information you need to set up your pension, you can add it to Sage Payroll.

How to set up a custom pension scheme

1. Select Pensions, then Add a new pension. Select Add your own pension.
2. Enter the name, Employer Reference, and address of your pension provider.

3. Select Add Group and complete the relevant fields from the table.

   Group name	Enter a name for this plan.
   Type of contribution	Choose the type of contribution you will make. Salary sacrifice. Money paid into the pension deducts from your employee's gross pay. This deducts before calculating tax and National Insurance  NOTE: When using Salary sacrifice, enter the percentage contribution for the employer and employee. The employee contribution shows as a negative payment on the payslip. Contribution deducted before tax. Money paid into the pension deducts from your employee's gross pay. This deducts before calculating tax. Taxable gross pay reduces the amount of the pension contribution. This means the employee does not pay tax on this contribution Contribution deducted after tax. The money paid into the pension deducts after tax calculates. The pension provider claims back the tax paid on this contribution, direct from HMRC
   Type of deduction	Choose whether the rates are a percentage of the employees’ pay or a fixed amount.
   Employer Contribution	Enter the percent or fixed amount you pay into the pension scheme.
   Employee Contribution	Enter the percent or fixed amount your employee pays into the pension scheme.

4. Select Next and complete the relevant fields from the table.

   Earnings Basis	If you chose a percentage deduction, choose one of the following options: Pensionable Pay. Payments where you’ve selected the Pension Earnings check box Qualifying Earnings. Payments where you’ve selected the Qualifying Earnings check box Custom Earnings Basis. Enter your own thresholds for pension contributions. You can then enter an annual lower and upper earnings limit. When you process your pay run, Payroll adjusts the thresholds based on the pay frequency. Only deducts pension on earnings between the two bands  NOTE: These options are not available for Salary sacrifice contributions.
   Annual lower earnings limit (£)	This option only appears if you chose Custom Earnings Basis. Enter the annual lower earnings limit for your pension.
   Annual upper earnings limit (£)	This option only appears if you chose Custom Earnings Basis. Enter the annual upper earnings limit for your pension.
   Contributions payment date	Select the date you pay the pension contributions to your pension provider.
   Default plan (optional)	Enroling employees into this pension scheme is automatic if you select this box. You can change this for individual employees when you process their pay run.

5. Select Save. You can repeat the process to add more groups if required.
6. Select the Qualifying Scheme check box.
7. To read the terms, select the our terms link. Then to accept them, select the Terms check box.
8. Select Save.

 NOTE: Payroll will correctly calculate pre-tax and post-tax deductions. You do not need to adjust the percentage amounts to allow for a pre or post tax calculation. 

Next steps

If you already use Sage Payroll and have set up a new pension, you need to add your scheme to the employees

If you have set up pensions as part of an FPS import, you can now continue Importing employees using the FPS file.

You can run a pension contributions report in Sage Payroll. Your Pension provider may let you use this to enter your pension data on their online template. You may also be able to save it as a file and upload it

If you would like more information on how to submit your pension data, read our article Submit pension contributions.