Pension Contribution Types

You can add as many pension contributions as you like for each employee. For example, you could add a 5% employee contribution and a 3% employer contribution. It is important to know the kind of tax relief your pension scheme uses and to choose the appropriate contribution type. If you are not sure which type of tax relief applies, please ask your pension provider.

Net Pay Arrangement (NPA)

If your pension provider uses the Net Pay Arrangement, the tax should be reduced in the payroll. Choose one of the NPA contribution types and our system will automatically deduct less tax.

Relief at Source (RAS)

If your pension scheme uses Relief at Source, there is no tax reduction in the payroll, but the pension provider boosts the contribution by reclaiming tax from HMRC.

Employee Contributions Reduced by RAS

If your pension scheme uses RAS, the amount added to the pension pot is more than the amount deducted from the wages. Because of this, when choosing the level of employee contributions, you can either decide how much is to be deducted from the wages, or you can decide on the total contribution including tax relief. In the later case, choose one of the RAS contribution types and our system will automatically reduce the pension contribution. In either case, the pension company will boost the contribution by claiming tax relief.

Minimum Pension for Automatic Enrolment

When you automatically enrol an employee, the law states the minimum contributions that can be made. This option calculates both the employer and employee contributions at that minimum level, and increases them automatically in April 2018 and 2019, as the law requires.

  • NPA Option: this reduces the tax.
  • RAS Option: for a RAS pension, the minimum employee deduction is lower.

Employee Contribution

This contribution is deducted from the employee's pay.

  • Simple Option: makes the full deduction.
  • NPA Option: this reduces the tax.
  • RAS Option: this reduces the contribution.

Additional Voluntary Contribution

An employee can voluntarily make extra contributions to their scheme and these are treated the same way as other employee contributions.

  • Simple Option: makes the full deduction.
  • NPA Option: this reduces the tax.
  • RAS Option: this reduces the contribution.

Employer Contribution

If the employer pays in to the pension scheme, this is called an employer contribution. If you are using one of the minimum auto enrolment contribution types, this will automatically work out the employer contribution so you don't need to add it separately.

  • Tax Relief: NPA and RAS tax reliefs don't apply to employer contributions.

Legacy Names (Personal Pension, Occupational Pension and AVC)

We changed the names of some of the pension contribution types, to make them clearer.

If you added contributions before the change, they may appear with the following names:

  • 'Personal Pension' is equivalent to 'Employee Contribution (Simple)'.
  • 'Occupational Pension' is equivalent to 'Employee Contribution (NPA)'.
  • 'AVC' is equivalent to 'AVC (NPA)'.
  • 'Free-Standing AVC' is equivalent to 'AVC (Simple)'.