FAQ Home

 
4766. Discrepancy in Pension Calculation. Why?
 

Our software calculates pension contributions correctly. Any differences in pension contributions 'calculated manually' as compared to those 'calculated by our software' could be mainly due to variations in the AE Pension Scheme settings. The settings that affect the contribution calculations are as follows:

  1. Pensionable / Non-pensionable Payment: If you have set up any pay item as not being subject to Pension deductions, it will not be considered for pension deduction calculations when you pay an employee for that item. For example: If you set up a new payment item called 'Bonus' and you select 'Yes' under Pension purposes, the payment item will be included in the employee’s pay before pension contributions are calculated. If you select No, the payment item will not be included in the employee's pay before pension contributions are calculated.

  2. Staging Date & Pay Period Setup(Pro-rata Effect): If your “Staging Date” falls within the pay period in which you are processing the pay run for, pension contributions will be calculated only for the period commencing from the staging date onwards and not for the entire pay period.
    For example: If your staging date is 10/05/2015 and your pay process period runs from 01/05/2015 to 31/05/2015, in this period the pension calculation will run from the staging date 10/05/2015 to 31/05/2015 only. For subsequent pay periods the pension calculation will be calculated for the whole period.

  3. Tax Relief Arrangement: Please review your AE Pension Scheme set up and check whether you have selected the correct "Tax Relief Arrangement". Below are the two tax relief methods available.

    Relief At Source: Pension contributions are taken from your pay after the deduction of income tax.

    Net Pay Approach: Pension contributions are taken from your pay before the deduction of income tax. For more information and example, please visit
    http://www.nidirect.gov.uk/workplace-pensions-and-tax-relief

  4. Earning Basis: Please review the AE Pension Scheme set up and check whether you have selected the appropriate 'Earnings Basis' for your employee(s). Pension deductions can be set up based on three different earnings basis as listed below:

    Qualifying Earning (QE): Pension deductions start only when the employee earns over the threshold. For this year threshold, please visit
    http://www.thepensionsregulator.gov.uk/employers/automatic-enrolment-earnings-threshold.aspx

    All Pensionable Earnings: The worker's total earnings are used to calculate the pension contribution.

  5. Custom: You can set up your own earnings limits to calculate the pension contribution.