Pension contribution increases – how should payroll prepare?
Spring not only brings changes in nature but also for anyone involved in payroll. New tax codes, new tax bands, new student loans, thresholds, statutory payments and living wage are amongst the many areas of change to implement from the start of the new tax year. All payroll professionals will once again be tasked with ensuring all changes are managed and applied accordingly. And in April this will include implementing the increases in statutory pension contributions.
In theory this is a relatively straightforward process when all employees contribute the exact same percentage. But what happens when things are more complex? Different calculations bases introduce various uplifts. Employees might have elected to contribute a value and not a percentage of their wages. What if there is more than one pension scheme within your company? And if you operate a salary exchange pension, what happens if the increase from 3% to 5% suddenly means that an employee is paid under the National Living Wage?
With all the above (and more) to consider, payroll professionals can have a complex job ensuring all changes are applied and employees receive the correct increased pension contributions.
At Ink, our preparation starts with a full review of each of our payroll clients’ pension bases and calculations. And unless our payroll clients decide to increase their contributions above the statutory minimum, they don’t have to do a thing to ensure the correct contributions for their employees are processed.
If you run your payroll in-house, we’d urge you to ensure you have all the relevant information well in advance of the new tax year. Forward planning for the statutory pension contribution changes will be key to implementing the changes successfully.
And if you outsource your payroll to an alternative provider, now would be a good time to ensure they have all the relevant changes in hand and ready to roll out in April.
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