Net pension - based on Pensionable Earnings or Total Earnings
A Net pension deduction 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. HMRC calls the method of deducting pension contributions relief at source (RAS).
In payroll, if say the employee’s pension deduction is 1%, you would enter 1% in the employee’s pension deduction standard value but the actual deduction will be 0.8% from their pay.
A Pensionable Earnings or Total Earnings pension deduction is calculated as a percentage of earnings you specified when setting up the People’s Pension scheme. For example, this could be a percentage of Salary only or Salary plus bonus etc.
Add Employee Pension Deduction
Add Employer Pension Deduction
Enter Default Percentage for the Employee and Employer Pension Deduction