In this guide, we will go through setting up pensions in Parolla. The pension can be set up in Parolla after you have created the employee profile. Pensions are either a benefit or a deduction.
Benefits are paid for by the company on behalf of the employee.
Deductions are taken directly from the employee’s earnings.
Both can be with or without Revenue tax relief.
Types of Pensions
- PRSA – Personal Retirement Savings Account.
- RAC – Retirement Annuity Contract.
- Occupational pension schemes (OPS) / Retirement Benefit Scheme (RBS) such as
Pensions have all different names. If in doubt ask your pension provider to confirm which pension type from the above list the pension is. The Pension type is what Revenue require.
Pension Set up
There are 3 parts to setting up pensions in Parolla.
- Create the pension provider as a recipient
- Create the pension plan
- Add employee’s payment particulars to the pension plan
- Pension tracing name and number and type (PRSA , RAC, etc)
- Employee pension membership number
- For employee contributions – employee’s Date of Birth and estimated annual income (employee contributions have age-related tax relief cut-off points)
1. Creating the pension provider as a recipient
Go to the menu bar and choose Settings > Recipients > +New.
Input the details, the pension option will appear in the Type box. Click on Create
2. Create the Pension Plan
From the menu bar choose Benefits/Deductions > Pensions > New
The pension or insurance recipient will now appear as an option in the Pension provider box. Fill in all available details and submit.
A default PRSA has been set up for you to use. If you wish to customise this, click on edit, make the relevant changes and click on submit.
3. Adding employee payment particulars to the pension plan.
Next, add the relevant employees as members of the pension by clicking on the people icon.
Click on the add member button in the top right of the screen.
Since PAYE modernisation Revenue requires the Pension details to be submitted with the pay run. The pension and/or membership number may be required.
Additional Voluntary Contributions (AVC’s)
Employees can make Additional Voluntary Contributions to their pension.
Tax relief for employee pension contributions is subject to two main limits:
- an age-related earnings percentage limit
- a total earnings limit.
The older the individual the greater % of income that can be contributed to the pension tax free.
How to add an AVC to an employee profile
- Create the Pension as per above.
- Create a deduction earnings type called AVC. Earnings types are created under Settings >Payslips > Deductions> New Deduction Type. Swipe across the “reduces gross calculation for PAYE” button only.
- Go to the employee’s template.
- Add the deduction line to the employees template. The amount can be left at zero if entering a variable amount each payslip or enter a fixed amount if the amount is set.
There is no need to set up a different Pension for the AVC, it is a payment into the existing pension.
Pension Contributions Report
A pension contributions report is available to assist with reconciliation or pension payments to providers.
Go to Benefits/Deductions > Pensions> Contributions
Choose the date range and relevant calendar. Advanced search allows you to choose individual employees.
I have added an employee as a member of a pension but it doesn’t appear on the payslip.
To resolve this, click Reload template in the pay run.