Employee Net Contribution - based on Certified Earnings

An Employee net contribution is deducted from the employee’s pay after Tax and NI is calculated, then the employee receives basic rate tax relief on that pension deduction. Higher rate tax payers need to claim the remaining tax relief from HMRC. This method of deducting pension contributions HMRC call relief at source (RAS).

In payroll, if say the employee’s pension deduction is 1%, you would enter 1% in the employee’s pension contribution value but the actual deduction will be 0.8% from their pay.

Certified Earnings is calculated as a percentage of the tiered earnings you specified when setting up the Friends Life scheme by choosing one of the following options:

• Tier 1 – must be at least equal to the employee’s basic pay, for example the employee’s salary. This doesn’t take into account any additional pay elements, such as overtime, bonuses, commission or shift premium pay.

• Tier 2 – must be at least 85% of the employee’s Total Earnings. This includes any additional pay elements, such as overtime or bonuses.

• Tier 3 – all of the employee’s earnings are pensionable. This includes any additional pay elements, such as overtime or bonuses.

  Add Employee Pension Deduction

  Add Employer Pension Deduction

  Enter Default Percentage for the Employee and Employer Pension Deduction:

  Configure Qualifying Earnings: