When are the AE Pension Rates and Qualifying Earnings Bands to Change?

Article ID
12173
Article Name
When are the AE Pension Rates and Qualifying Earnings Bands to Change?
Created Date
2nd April 2019
Product
IRIS Payroll Business, IRIS Bureau Payroll, IRIS GP Payroll, IRIS Payroll Professional, IRIS Earnie IQ
Problem

The payroll software is using the AE pension earnings bands from 18/19 for the first period of 19/20.

Resolution

Pension Earnings Bands

 

The bands Qualifying Earnings Lower & Qualifying Earnings Upper change when moving into

the new tax year.

These changes for 18/19 into 19/20 are:

 

 

If the PRP start date is in the 2018/19 tax year, the bands that should be used are

the 2018/19 bands.

 

So for the example below, the qualifying earnings lower limit used for week 1 payroll be £116, the 2018/19 rate, as the PRP start date is in the 2018/19 tax year (01/04/19).

 

If your pension has different requirements ie. Threshold change should be applied to the tax year rather than the Pay Reference Period (PRP).

 

We have introduced functionality into your payroll software to override this behaviour and apply threshold changes based on tax year rather than PRP. This is a less common scenario so please check with your pension provider if you are unsure.

To alter this option:

IRIS Payroll Business/IRIS Bureau Payroll: Go to “Pension“|”Configure Auto Enrolment“. For the option “AE Thresholds” select either “Use Pay Reference period” or “Use Tax Year

IRIS Payroll Professional/Earnie/Earnie IQ:  Go to “Pension“|”Configure Auto Enrolment“. For the option “AE Thresholds” select either “Use Pay Reference period” or “Use Tax Year

IRIS GP Payroll: Go to “Setup/ Options” | “4 – Practice Pension Details” |Auto Enrolment Details” | “Configure Automatic Enrolment”. For the option AE Thresholdsselect eitherUse Pay Reference periodorUse Tax Year 

Please Note: This functionality is not available in the PAYE-Master software.

Important Exception: If the employee is a New Starter or has their 22nd Birthday,their Assessment date will be their Start Date or birthday.  If this date is in the previous tax year, the qualifying earnings lower limit will be £116. If the date is on or after 6th April, the qualifying earnings lower limit will be £118.

 

Pension Deduction Rates


The pension percentage rate increase is to be actioned from any payroll date on or after 6th April, regardless of any PRP.

 

So again using the example below, the bands used should be 3% (Ers) and 5%(Ees) for week 1 payroll – as the payroll date (12/04/19) is in the 2019/20 tax year.

 

For help uplifting your pension contribution rates please click here.