Occupational pension set up in Moneysoft?

Occupational pension set up in Moneysoft?

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Hello

My first client goes live with auto-enrollment this month and I'm just trying to understand it all and make sure it is set up correctly...

Client has set up an occupational pension scheme, the pension provider says it's an occupation pension and the pension contributions should be deducted gross before tax.  

I use Moneysoft so have amended the setting from 'Basic tax relief' at source to 'No tax relief'.  Which calculates the employees and employers contributions as the same amount which their pension software indicates it wants me to do BUT Moneysoft guidance says in the majority of cases I should select, 'basic tax relief, net pay arrangement or salary sacrifice.  So that doesn't seem quite right?

And then how would the employee get tax relief because the pension contributions doesn't affect how the tax is calculated.  

How I have always understand it, is that, gross pay less pension contributions = taxable pay.

So I'm not sure I should set the settings to 'no tax relief' - I'm confused!  If anyone could give me some help it would be greatly appreciated.

I think I need to use the 'Net Pay' option?

Replies (2)

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By SteveHa
06th Apr 2016 09:12

Net Pay Arrangement

Will deduct the pension contribution from gross and calculate tax on the net after pension contributions, which effectively gives relief at the marginal rate.

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By Kazmc
06th Apr 2016 09:49

Confusing

I think things get confusing as different pension providers and payroll software companies use different terminology.

For example IRIS payroll software call a scheme "Before Tax & After NI Net Pay Arrangement" but that same type scheme is known as "Gross" by The Peoples Pension and "Net Scheme aka Relief at Source Arrangement" by Now:Pensions.

As a payroller Net and Gross, to us, are opposites so how can the same type schemes be known by both Net and Gross? I think a whole host of schemes will be set up with incorrect tax relief calculations.

Edit to add: We are going so far as to have an audit carried out on all our AE processes next week to ensure that my interpretation of everything is correct. Its a big worry.

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