Share this content
0
499

Weekly pension calculation

Is it correct for pension to be calculated on a 'day worked' basis

Didn't find your answer?

Search AccountingWEB

Ordinarily a worker has a full week timesheet and the pension iscalculated on that value - all works fine and upper/lower thresholds all being adhered to.

IF the worker has a termination/leave date of mid week, then the software has calculated the 'pro rata' value rather than the full weeks value..

i.e. the worker had a leave date of wednesday so only made a fraction of the pension contribution they would normally have made for the week - the leave date was entered incorrectly as mid week instead of end of week

For all intents and purposes it seems the calculation was acrried out much like SSP would be - but is this correct? Software provider says it is but i cannot find anything from searching for 'pension per day' type information

thanks

 

Replies (7)

Please login or register to join the discussion.

avatar
By paul.benny
11th Sep 2019 09:10

For an employee earning the maximum for autoenrollment, the potential discrepancy is less than £10/day.

If the software provider assures you that their software treats mid-week leavers correctly, for such a small potential discrepancy, I would leave it at that.

Thanks (1)
Hallerud at Easter
By DJKL
11th Sep 2019 09:58

If AE pension surely the contribution is a percentage of the earnings over threshold, so not sure relevance of number of days except insofar as it reduces the gross..

Thanks (1)
avatar
By alan.falcondale
11th Sep 2019 11:30

Yes, the discrepancy would ordinarily be low - but the contributions in relative terms to the gross is a low percentage.
However, the difference in this instance - the gross value was the same for the final and penultimate periods - was, for the employee, the difference between £29 contribution and £10 contribution.
For the employer the contributions were £18 and £6
(all values rounded up by pence to the pound and not accounting for any tax advantages)
So the potential 'loss' was circa £31 for the period - as Paul rightly says ~£10/day

The query was - is the software working within legislation to say the pension is calculable on the pro-rata basis for the period worked ala SSP?
The hours are entered for the period - the leave date was entered mid-period

thanks

Thanks (0)
Hallerud at Easter
By DJKL
11th Sep 2019 12:07

How ought the contribution be computed in terms of the scheme rules is the question- what type of scheme, you have yet to say but if AE contributions follow actual amounts paid per pay period be that normally weekly or monthly.

Thanks (1)
avatar
By aburt01
12th Sep 2019 10:43

I'm not sure I agree with the software provider.
For me, the key is the Pay Reference Period,(usual interval between payments) which in this case remains a week, even if they are leaving mid week.

Please refer to the pensions regulator website for details...
https://www.thepensionsregulator.gov.uk/en/document-library/automatic-en...

8% is 8%, and £118 is £118 qual earn threshold for the pay reference period of 1 week, as per this chart...
https://www.thepensionsregulator.gov.uk/en/employers/new-employers/im-an...

I don't see anyone pro-rating anything in the guidance.
Enjoy deciding for yourself.

Thanks (1)
avatar
By psimonparsons
12th Sep 2019 11:32

Dependency on scheme rules. It is critical that the correct contribution is calculated. And no to is it normal to go daily, not if the pay frequency is weekly. Judgement point is the pay reference period and generally the date of payment.

Thanks (1)
avatar
By alan.falcondale
16th Sep 2019 10:54

Thanks everyone for the contributions, and the direction we have at the moment is that the apportionment would be correct for a mid week leave date when considering that the worker could be starting with new employer the following day....so potentially having dual period contribution if apportionment was not in place.
We still have responses awaited from a dev supplier but this sounds logical

Thanks (0)
Share this content