Pension Contributions - (NEST - auto enrollment)

Hi there, @Phil.

Thanks for taking the time posting your concern here in the Community. I'm here to guide you to the right support who can help you with the pension scheme. 

I'd like to acknowledge your effort in sharing very detailed information about your concern. Intuit wants to make sure our customers are compliant with their state guidelines. In this case, I recommend contacting our QuickBooks Desktop Payroll Support Team so they can check the calculation of your contribution and make an adjustment if necessary. 

You can contact our customer support through this link: https://quickbooks.intuit.com/uk/contact/. 

You may also check this article to learn more about the auto Enrolment for workplace pensions in QuickBooks Desktop. 

Please know that you're always welcome to post if you have any other concerns. Have a good day ahead. 

We have contact support - and given them remote access - but they they could not identify the problem - they though we had done it correctly.

We have since confirmed that Employee's Pension Contributions have been incorrectly deducted from their gross pay (before tax)

Can you provide detailed guidance for a pension scheme that does not operate a NET PAY Arrangement?

(X % of gross pay, should be deducted from Net Pay (After TAX), and must not modify taxable income shown on P60 & P45 forms)

What are the setting for a payroll item that achieves this?

Thanks for getting back to us, @Phil.

Allow me to step in and provide some information about the pension scheme in QuickBooks Desktop (QBDT).

The pension scheme calculate depends on how you set up the year to date of the employee on the P45 and P60 form. It'll also matter on how you setup your Pension item and the payroll dates you've run.

When you enroll for workplace pensions, you'll need to enter the default contribution rates. This way, the pension scheme will properly operate a net pay arrangement.

You can check out this article for more details: Auto Enrolment for Workplace Pensions.

Also, I suggest seeking help from your accountant about the payroll item that deducts the percentage of gross pay from net pay. This way, they can advise which account to use when setting up a payroll item.

You might want to read this article to learn how to print P60 forms in QuickBooks Desktop: Print P60 Forms in QuickBooks Desktop Payroll.

Please feel free to post any other questions you have below. The Community and I are always here to help you out.

Mark - Thanks for responding and providing links to relevant articles - which we have already studied.

We have been running auto-enrollment for three years, and our employees are enrolled in NEST - which DOES NOT operate a NET PAY ARRANGEMENT.

We have recently identified 'an error' that means employee pension contributions have been processed incorrectly - and we now know that the deductions have been 'untaxed' which is wrong. We have not identified 'our mistake' - and we would like learn what we should have done wrong.

QB support said the 'settings are correct' - but our analysis shows they are not!

Is this a 'user error' or a 'software bug'?

Hello Phil

From the information in this thread we can not confirm if it is down to settings that may be ticked in the Desktop Payroll and therefore user error.

If possible can we ask for some screenshots so we can look at this further.

Can we ask you to go to lists>payroll item list>employer and employer>then proceed through to the taxes and ni tickable boxes.Could you then send us a screen shot of those boxes showing what is ticked.

Could you also provide us with an example with figures based on gross earnings what is QuickBooks deducting and what amount are you expecting to see?

Thanks

Emma

Hi

The shows the current settings. (The %'age has changed for 2018-19 - but other setting are the same)

The other file shows the results from last year, and the 'correct values'

The contributions should be calculated as a %'age of Gross Pay and deducted from NET PAY ~(after tax has been deducted).

Therefore

TAXABLE INCOME should equal EMPLOYEES GROSS PAY

Taxable Income should also = Total Pay used to calculate national insurance contribution

Thanks for your support.

These are the results from last year with corrected data.

Thank you very much for the screen shots,I am sorry about the delay in getting back to you. We have had a desktop payroll specialist double check the settings and done some calculations and what they have advised is in the settings for employee contribution the section which has gross vs net would need to be changed to calculate on net pay to work out the 3.2%  as you have requested.They have asked if you can just double check how the employer contribution is set up also as the desktop product can default to tick everything.

Any questions let us know

Emma

We have checked the employer contributions and those are correctly calculated as a percentage of Gross pay - and have no impact on tax or national insurance.

If I understand you correctly - the choice to calculate contributions as a percentage of Gross Pay results in the payment being taken from gross pay and reduces the tax liability (wrongly) even though we have said it should not affect Income Tax. This an 'undocumented feature' of the software - and I suspect other users will have similar problems - although they may be unaware of them.

Calculating contributions as a percentage of NET PAY as suggested is a poor solution as the calculation will be affected by the employees national insurance contributions that are variable. As a result every data entry on the NEST website will have to be manually reconciled with quick books.

The documentation also need to changed to explain how the software works - and what effect the choices offered have.

Hello there, Phil.

Thanks for sharing additional information about your concern with how employer contributions setup affects tax calculations in QuickBooks.

This issue is best handled by our QuickBooks Desktop Payroll Support. They have the tools such as screen sharing which is helpful to take a closer look at your issue. 

You can reach them through this link: https://quickbooks.intuit.com/uk/contact/.

I'd also suggest sharing the link to this thread so our representative will have a grasp of the steps that you made so far.

If I can help you with something else, please let me know and I'd be glad to further assist.

Hi Phil, 

We are having this same problem. Would you be able to post what the final solution to this was?

We have just transitioned from desktop to online and online seems to deduct pension from gross pay which means the tax deduction is slightly reduced - incorrectly. 

Thanks, 

Hugh

Hi, Ashfield.

I'd be glad to help point you in the right direction. Since the Community is a peer-to-peer forum, I won't be able to check your account without asking for sensitive information. For security purposes, it would be best to contact our QuickBooks Online Support.

All account-related concerns are directed to our phone support. Agents have the necessary tools to pull up your account in a secure environment and have the tax correction to be process.

I'm also including these articles to help guide you more about pension contribution in QuickBooks:

• QuickBooks Online Advanced Payroll Hub
• Manually setup a workplace pension scheme in QuickBooks Online Advanced Payroll

Feel free to drop me a reply below if you have any other concerns. I'll be around to help you out.

Did you get to the bottom of this or did you cancel subscription.
I am having problems too :pouting_face:

In the end I set up the pension manually rather than through the pensionsync function. That way I could choose Relief at Source rather than Net Pay. 

That way it would take the 5% pension off people with the tax relief already claimed and didn't affect the taxation calculation. 

The only other work around was overwriting some employees pension up to 6.25% to then take their contribution back down to 5% as it was calculating it as relief at source. Not sure if that is right but was the only way round it in the short-term. 

Hugh

All Sorted NOW,
Thank you for your reply.

And thank you to BEN :trophy:form QuickBook

Hope you All Stay Safe 

ive used desktop for 15+ years now come to use this online rubbish so far worse bit of software going, so nothing has ran smoothly, i now have come across the same headache

Hi, rosie1102.

You'll have to set up a pension scheme for your business to process workplace pension files within QuickBooks Online Payroll. Then, use inbuilt Pensionsync integration to automate your pension reporting.

Please check this article for the detailed steps on how to set it up: Manually Set Up A WorkPlace Pension Scheme In QuickBooks Online Advanced Payroll.

You'll also want to visit this article for more information: Pension Scheme SetUp.

Let me know if there's anything else that we can do to help. We're always right here to assist.

Sorry QuickBooks you are incorrect there. Myself and loads of other users have found this issue which remains unresolved.

The pensionsync will not calculate correctly for Nest don’t use it. 

You need to set up manually and don’t use pensionsync!

I agree with you CPS Payroll. Sorry to say it but the pensionsync didn't seem to work for me either. We use NEST and it just wasn't correct due to reasons already mentioned. Had to set it up manually and that works fine but don't use pensionsync until it is fixed! 

HI,

Did you manage to find a long term solution to this problem in the end?

Even though I have set my pension contributions to 5% quickbooks has been calculating it at 4%.

When I rang them they said its something to do with tax cant be changed. When I said I need to meet minimum pension contributions they said to put a higher percentage in until I got the right value.

Like you it is 6.25%

Accountant says its not ideal but he cant see any other way of doing it.

Surely this is some sort of software problem with quickbooks?

I have just discovered this same problem with the difference between what Quickbooks and Nest say our staff contributions should be - so presume that this long standing problem has not been solved.

Nest say contributions should be 3% employer and 5% employee on earnings above £520 per month

Quickbooks has been calculating 3% employer and 4% employee on total gross earnings

I'm thinking I will need to take the pension function off Quickbooks and work out contributions myself, though I will try removing the pensionsync option as it never did submit the pension amounts automatically to Nest, as it said it would.

Currently very disappointed with Quickbooks for making pensions unnecessarily complicated!

Hi lesley-highriggs, 

Thanks for joining this thread - the differences in % contribution will be based on the settings you have selected for the pension - the 'Tax Relief at Source' method reduces the EE contribution by 20%, so the usual 5% becomes 4%. Please check the pension contribution method you have selected within the pensions settings to verify this - there's also a helpful guide from NEST linked here which covers calculating RAS. Get back to us below if you have any questions! :)

Hi Lesley, 

Yes it is still an issue that we have to work around which seems bizarre to me nearly 2 years later. The pensionsync part has never worked for us either. 

Many thanks, 

Hugh