How do I process a refund due for the pension payments made by employer and employee for an employee who has now opted out.

Hello DAJA,

Welcome to the Community - thank you for your question!

Did they opt-out within the month?

Thanks,

Talia

Yes, they opted out within a month. I have been advised by the pension company that the employee is due a refund of £72.13 and we are due a refund of £57.34

Are you using QuickBooks Payroll, or PaySuite?

Thanks,

Talia

I am using QuickBooks Payroll

Hi DAJA

If you have opted the employee out within calendar month of them being enrolled the payroll system will automatically refund the employee if any deductions have been taken, this should be reflected on the empployees payslip.

Hi

I am using Paysuite. What is the process with this? 

(sorry for butting in on the question but I have exactly the same problem)

thank you

Alison

Hi AMR1971

For the employee pension refund there is an option within variable input > PAYMENTS (NON-TAXABLE) > pension refund.

For the employer proportion you can create a Journal Entry, on line one select the bank account that the amount was received to and in the debit column enter the amount. On line two select the Other Payroll Deductions account and enter the amount in the credit column.

The above is on the assumption that you have actually received the refund into your bank account.

Hi John

Total refund was £17.64, which we have received. The employee part was for £10.08 and I processed this using the variable input. However,  If I do the journal entry with the total amount received in the debit column of the bank account and credit other payroll deductions, this leaves my Other Payroll Deductions unbalanced? 

I think I am missing something. Please advise

thanks

Hi AMR1971

When you create the Journal Entry for the employer part of the pension refund the amounts you enter in the debit and credit column are only for the employer proportion of the refund, £7.56

Hi John

I am still not getting things to balance out here. 

I have added the refund on the employee side using the variable input. This appears to add the refund to the Payroll expenses account (this is done automatically, not by me)

The journal entry showing the refund coming into the bank account had to show the full amount as a debit entry to the bank account? 

Should the employee element go to Payroll Expenses to balance it out?

This then leaves the employer element - if i put  it into Other Payroll deductions, it puts this account of of balance. 

Hope this makes sense. i am getting somewhat frustrated here as this must be a regular occurrence when someone opts out of the pension.

thank you

Hi AMR1971

I apologise for the late reply however I was not in the office yesterday afternoon.

I assume that when you initially ran the payroll/previous payroll you then created the relevant expense to the pension provider debiting the 17.64, or this amount was included in an overall amount, from the Other Payroll Deductions account.

On the next/current payrun you have then added the pension refund via variable input for 10.08

You will then have to create a Journal Entry debiting the bank account for the 17.64 and crediting the Pensions account with 7.56 and also crediting the Payroll Expenses account with 10.08.

I would be grateful if you can inform me if this has resolved the issue.

Hi John

That's it sorted now. 

Thanks for the help. 

Thanks for joining us in this article, MatthewLeggett.

If you're using QuickBooks Online (QBO, any contributions deducted from the employee should be refunded on the next available payroll run if there is a valid opt-out.

For more information, you can check out this article: Workplace Pensions.

Otherwise, I recommend contacting our Payroll Support Team if you're using the Desktop version of QuickBooks. They have a specific tool to help you further with the adjustments.

Here's how to contact them:

1. Open QuickBooks.
2. Go to Help.
3. Choose QuickBooks Desktop Help.
4. Click on Contact us.

That'll get you in touch with one of our payroll specialists.

Please let me know if you have any questions. I'm always around to help. Have a great day.

Hi, I am still uncertain how to do this re Quickbooks Desktop.  Some say the refund will be calculated automatically (I have created a further payroll but no refund comes up) and some say to create a new payroll item for refund.  Can I have step by step guidance on this please?

Hi, unsure how to do this within Quickbooks Desktop.  Employee has opted out within one month, I've read that refund will automatically be processed, I have tried to create a pay chq after this date but no refund has appeared on payslip.  I've also read in this post that one needs to create an additional payroll item for pension refund, I've tried to do this but I'm not sure how to process.  Can you help?

Hi Caroline69,

Thanks for posting on the community.

I'm afraid that the pension refund after option out does not calculate automatically. Please see below the steps to create this pension refund in QuickBooks desktop.

1) Employer contribution.

Click on , Employees tab at the top> Payroll taxes and liabilities> Adjust liabilities.

In the next screen, click the 'Employee' radio button, and then from the drop down select the employee in question. Under item name choose the employer pension item which you have created, and in the amount column put the amount of employer pension to be reduced and put a minus in front of it. The click 'Ok' to save adjustment.


2) Employee refund

In order to refund the amount taken from the employee, you need to add this in as a separate addition item in your payroll item list and then add this onto the 'Other payroll items' section on the payroll payment details.

To set this item up, go to Lists> Payroll item list> and then create new. Then place this item under the 'Other payroll items' section of the payroll payment, and put in the positive amount to be refunded to the employee.

 

Thank you so much, Chris.

The step by step instructions were crystal clear and extremely helpful. 

One more question, when creating a new payroll item type (which I'm calling Pension Refund Employee), which payroll item type is this, an "addition" or a "deduction"?

Hi Caroline69,

No problem at all.

The pension refund to the employee would be an addition item as opposed to a deduction.

Thanks,

how do you do this what are the steps

Hello Claire , Are you using the desktop product?

Can I please have a step by step guide to do this on Quickbooks online payroll please 

Hi giuliana-birdand, certainly! Can we first check if you're using the Standard or the Advanced version? :)