Stakeholder Pensions

Summary

How to set up Stakeholder pension deductions in Sage Payroll.

Description

A stakeholder pension is one of the more basic and flexible pension schemes.

Before 1 October 2012:

Employers with five or more employees had to make a stakeholder scheme available. This had to happen within three months of them meeting stakeholder requirements. Some employers were exempt.

NOTE:

since automatic enrolment, it's no longer a statutory requirement. For more information, visit thepensionregulator.gov.uk

Resolution

The pension contribution is ultimately tax free. However, the employee must pay tax, which the pension provider reclaims from the HMRC. It gets added to the employee’s pension fund. Employees contributing to stakeholder schemes can have NI categories A, B, C, or J.

You can set up a stakeholder pension deduction in Payroll by following the below steps:

  1. Select Settings from the menu bar.
  2. Select Payments & Deductions and the Deductions tab.
  3. Select Create new deduction.
  4. Complete as required, the details below:
Deduction category Choose Pensions in the drop-down list.
Deduction type The pension type Stakeholder Pension appears by default.
Name If required, change the deduction name. By default, the name appears as Stakeholder Pension.
Description If required, change the description. By default, the description appears as Government legislated contracted-in pension scheme.
Employee Standard Contribution This option appears after you choose Pensions from the Deduction Category dropdown list.

There are two options:

  • Fixed amount. To contribute a fixed amount each month toward the pension. Enter the amount in the next box
  • Percentage of pay. To contribute a percentage of pay each month toward the pension. Enter the percentage in the next box
Employer Standard Contribution This option appears after you choose Pensions from the Deduction Category dropdown list.

There are two options:

  • Fixed amount. To contribute a fixed amount each month toward the pension. Enter the amount in the next box
  • Percentage of pay. To contribute a percentage of pay each month toward the pension. Enter the percentage in the next box
  1. Select Save.

Adding the deduction

  1. Select Summary from the menu bar.
  2. Then Process pay run.
  3. Process until the PAY window.
  4. Select the employee with the correction.
  5. Choose Add Deduction then choose Stakeholder pension.

    NOTE:

    You only need to create the deduction once. It will then be available for any employee to select.

     

Removing the deduction

Delete the deduction when you next run the payroll.

  1. From the Edit pay screen, look at the Deduction section.
  2. Select the X to the left of the Stakeholder Pension deduction

To view the pension contributions for a historical period, you can check Section 3 of the detailed payroll report.

Related Solutions

Read the HMRC article Personal Pensions

Solution Properties

Solution ID
222001000101765
Last Modified Date
Tue Jul 28 14:47:48 UTC 2026
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