Employer and Employee Contribution Rates
Employee contributions to the main scheme are calculated using salary bands that are based on annual pensionable pay for a full scheme year.
The employee pays contributions at the appropriate band rate on all pensionable pay received in respect of that job. For information on calculating contributions on reduced pay due to absence, see the section on Assumed Pensionable Pay.
The employer contribution rate applies to all employees in your organisation. It is a percentage of an employee’s pensionable earnings for the period even when on reduced pay.
Two empty calculation value definitions, TPS Employee Pension Rates and TPS Employer Pension Rates, are predefined to store salary bands and corresponding contribution rates. Use these to maintain the rates in accordance with the current legislation.
One empty calculation value definition, TPS Employee Pension Rates Tier, is predefined to store the range items that determine the rates tier. The From and To values from TPS Employee Pension Rates Tier should match the TPS Employee Pension Rates value definition on the effective dates.
One empty calculation value definition, TPS Pensionable Annual Salary Minimum and Maximum, is predefined to store the minimum and maximum pensionable annual salary. Annual salary value must be within the permitted range.This is required in Error and Warning section of MCR report.
| Calculation Value Definition Name | Value Definition Group |
|---|---|
| TPS Employee Pension Rates | Public Sector Pension rates |
| TPS Employer Pension Rates | Public Sector Pension rates |
| TPS Employee Pension Rates Tier | Public Sector Pension rates |
| TPS Pensionable Annual Salary Minimum and Maximum | Public Sector Pension rates |
Update these tables as needed to ensure the salary bands and percentages comply with legislative changes.
When entering the new pension year rows, end date the old rows to 31 March YYYY. The new rows should be effective from 01 April YYYY.
Update Calculation Value Definition
To update the public sector pension rate calculation value definitions to reflect current values:
Use the Calculation Value Definitions task, and search for each value definition prefixed with TPS.
Select the Value Definition and enter the calculation values. Enter the percentage rates for each of the predefined value definitions. For example, enter the employee rates for the 2020 tax year as shown here:
| START DATE | LOW | HIGH | Rate | CALCULATION TYPE |
|---|---|---|---|---|
| 01-Apr-2020 | 0 | 28,168.99 | 7,4% | Flat Amount |
| 01-Apr-2020 | 28,169 | 37,918.99 | 8,6% | Flat Amount |
| 01-Apr-2020 | 37,919 | 44,960.99 | 9,6% | Flat Amount |
| 01-Apr-2020 | 44,961 | 59,587.99 | 10.2% | Flat Amount |
| 01-Apr-2020 | 59,588 | 81,254.99 | 11.3% | Flat Amount |
| 01-Apr-2020 | 81,255 | 9999,999,99 | 11.7% | Flat Amount |
| START DATE | From | To | Number | CALCULATION TYPE |
|---|---|---|---|---|
| 01-Apr-2020 | 0 | 28,168.99 | 1 | Number |
| 01-Apr-2020 | 28,169 | 37,918.99 | 2 | Number |
| 01-Apr-2020 | 37,919 | 44,960.99 | 3 | Number |
| 01-Apr-2020 | 44,961 | 59,587.99 | 4 | Number |
| 01-Apr-2020 | 59,588 | 81,254,99 | 5 | Number |
| 01-Apr-2020 | 81,255 | 9999,999,99 | 6 | Number |