Payroll/Pension Deduction Query

columbia Experienced MentorRegistered Posts: 580
Hi guys

Can someone help me please. I only know what I need to know as far as payroll is concerned, and I have never had to deal with pension deductions from wages before.

I use Sage Payroll and only one employee has a weekly deduction regarding a pension payment, this amount is posted to 2230 via the wizard. They are NI category A.

Now I am at year end and I have a few hundred pounds in this account showing as a credit balance, here's the silly question...... what exactly do I do with this amount, should I be forwarding it HMRC????? Have I messed up somewhere?

All advise greatfully received!

Thanks in advance



  • Cullen
    Cullen Experienced Mentor Registered Posts: 592
    Does this amount have to be paid to the pension company? How have you posted payments to the pension company before?

    I suspect, ( I may be wrong of course) that you may have posted all of the monthly payment to the pension as an expense? If this is the case it may just need a journal debiting account 2230 and crediting the expense?

    If your situation is different, let me know and I will get my head around it again.
  • columbia
    columbia Experienced Mentor Registered Posts: 580
    Hi Cullen

    Thanks for your reply. We are only a small company, we pay one employees pension for them on a monthly basis, direct to the pension company.

    This other employee has their pension deducted from their net earnings, and as stated previously the wizard within sage automatically posts this to 2230, so the effect now at year end is that I have a liability sitting in my balance sheet, and I can only assume that I must have to make a payment to a pension company on our employees behalf, does this sound right, and is this normal procedure??

    Kind regards

  • Cullen
    Cullen Experienced Mentor Registered Posts: 592
    Hi Columbia,

    You should be paying the pension company whatever you have deducted from the employees pay and any contribution the employer may make. Have you two separate pension companies here? Can you reconcile the amount in the pension liability to your employees deductions?

    What you suggest does indeed sound right and yes it is normal. I deduct contributions from two of my employees, the company chucks in a few bob as well and I send the cheque for the whole lot off to the pension provider monthly. Perhaps if you give the pension company a call and ask them how would they like you to deal with the admin of their payments etcetera.

    Hope you are all right with this, if not give me a pm.
  • columbia
    columbia Experienced Mentor Registered Posts: 580
    Thanks a lot Cullen

    I will try and find out who the pension provider is and make sure a payment is sent to them. The accounts and payroll info was in a pickle when I started here, and I really should have picked up on the pension amount not being forwarded, but I have never dealt with pension deductions before.

    I only hope that prior to myself joining the company, that previous years totals have been paid in, or else I might have a mammoth task on my hands!

    Thanks again

    Edit - Just found paperwork regarding this. The company I work for changed names last year, and from what I can gather the direct debit for the pension company was cancelled under the old bank account and not set up under the new name and new bank account, which is why I have nothing to offset the deductions against. Fingers crossed I will be able to sort this out quite quickly and get the DD set up monthly again.
    Once again, thanks for your help.

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