How do I refund pension contributions if an employee has opted-out?

This depends on:

  • Your pension configuration.

  • Whether the employee’s earnings for the pension deduction were the same each period.

  • If you have just moved into the new tax year.

Employee’s Contribution Refund

Example – percentage

Where the employee’s earnings for the pension deduction are the same each pay period and the refund is due in the same tax year as the enrolment date (the pension deduction is a percentage of the employee’s salary).

  1. From Company, select Alter Payments/Deductions and then Add New.

  2. Select No to using the wizard.

  3. Create a deduction with the same set-up as the original pension deduction.

  4. Select OK and then OK again.

  5. During the payroll run, on the Payroll Run screen for that employee, select the new deduction and enter a NEGATIVE percentage in the Amount column.

  6. The pension deduction refund value must NOT exceed the pension deduction year to-date value.

Example - Value

Where the employee’s earnings for the pension deduction differ each pay period and the refund is due in the same tax year as the enrolment date (the pension deduction is a percentage of total hours paid to the employee)/

  1. From Company, select Alter Payments/Deductions and then Add New.

  2. Select No to using the wizard.

  3. Create a deduction with the same set-up as the original pension deduction.

  4. Make sure the Type is Value.

  5. Select OK and then OK again.

  6. During the payroll run, in the Payroll Run screen for that employee, select the new deduction and enter a NEGATIVE value in the Amount column.

  7. The pension deduction refund value must NOT exceed the pension deduction year to-date value.

    The pension deduction used to refund should not be assigned to a Pension Fund.

Employer’s Contribution Refund

  1. From Company, select Alter Payments/Deductions and then Add New.

  2. Select No to using the wizard.

  3. Create a deduction with the same set-up as the original pension deduction (Display Item Only).

  4. Ensure the Type is Value.

  5. Select OK then OK again.

  6. During the payroll run, in the Payroll Run screen for that employee, select the new deduction and enter a NEGATIVE value in the Amount column.

  7. The pension deduction refund value must NOT exceed the Employer’s pension deduction year to-date value.