Pension schemes available and how to set them up in Sage Payroll.
Description
A pension scheme is a way of saving money for retirement. Regular payments are made into the scheme during an employee's working life. This money is then repaid after retirement, usually as a regular income.
An employee may choose to pay into a pension scheme at any time. As an employer, you can collect pension contributions from the employee. These are then passed on to the pension provider. With some schemes, you can also make contributions on the employee's behalf.
Read more about pension options on The Pensions Authority (opens in new tab) website.
Resolution
Tax is taken from the employee’s gross pay after pension deductions apply. However, Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) are taken from an employee’s gross pay before pension deductions apply. So a pension deduction is not subject to tax, but it is subject to USC and PRSI.
You can set up and manage the following company pension schemes in Payroll:
Pension
This is an occupational pension scheme offered by an employer to employees. It involves employee and employer contributions.
Personal retirement savings account (PRSA)
A PRSA is a retirement account an individual sets up with a PRSA provider for the long term. The individual can change employment and continue to use the same PRSA. It involves both employee and employer contributions.
Employers not offering a pension plan must give employees access to at least one PRSA scheme.
Retirement annuity contracts (RAC)
A RAC is a personal pension scheme. It can set up by a self-employed person or an employee who does not have an occupational pension scheme. Employers don’t make contributions to RAC schemes.
TIP: You can also create a new pension deduction when you process employee pay.
- Select the Settings tab, then select Payments & Deductions.
- Select the Deductions tab and select Create New Deduction.
-
Complete the following information:
Deduction Category | From the drop-down list, select Pensions. |
Deduction Type | From the drop-down list, select one of the following options: - Pension
- Pension - PRSA
- Pension - RAC
|
Name | Enter a name for the deduction. You can accept the deduction's default name or you can specify a new one. |
Description | Enter some explanatory text to make it clear what the deduction is for. |
Employee's Standard Contribution | Enter the amount you want to deduct off your employees each pay period. This can be a fixed amount or a percentage of pay. You can also change this amount while you're processing an employee's pay details. Read article Edit pay. |
Employer's Standard Contribution | If applicable, enter your company's standard pension contribution. This can be a fixed amount or a percentage of pay. You can also change this amount while you're processing an employee's pay details. Read our article Edit pay. |
- Select Save.
When you’re processing employee pay in the Edit Pay window, carry out the following steps:
- Select the employee you want to start deducting pension contributions from.
- Select Add Deduction and choose the relevant pension scheme deduction.
- You can edit the employee or employer contribution amounts in the current pay run. Select the deduction, make the necessary changes and select OK.
- Continue processing employee pay, and complete the pay run as normal.
When you’re processing employee pay in the Edit Pay window, carry out the following steps:
- Select the employee you want to stop deducting pension contributions from.
- Click the delete button
to the left of the deduction. - Continue processing employee pay, and complete the pay run as normal.