25/03/2024
We’re going to kick of the week with a pension horror story...
We recently took on a client who had been processing their payroll in-house for several years until their payroll admin relocated. They had an auto-enrolment scheme in place which they had recently switched over to a salary sacrifice scheme. The payroll admin had been processing the salary sacrifice scheme for 9 months until we took the payroll over.
The company sent us a copy of their pension upload file, but something didn’t quite add up. It turns out that the payroll admin had been uploading DOUBLE the employee contributions since the company had moved to a salary sacrifice scheme. Over the 9 months, this had cost the company over £80k in additional pension payments!
The previous admin hadn’t understood how the salary sacrifice scheme works, and had been uploading the total employee and employer contributions, then uploading the deductions from the employees salary on top of this amount, causing the employer to pay 1.5 times what they should have in contributions each month.
How did we fix it, I hear you ask?
We downloaded all the payments made to the pension provider for the past 9 months and recalculated what should have been paid for each employee. We contacted the pension company and requested that the amounts paid in for each employee were adjusted for each month and requested a refund of the overpaid amounts. The refund was processed 2-weeks later, and the company received *nearly* all of their overpayment back. (We weren’t able to get a refund for 4 employees who had left the scheme and the company already).
The moral of the story is to make sure whoever is processing your payroll understands each intricate detail, such as how to process your pension contributions.
Get in touch with us if you’d like any advice, information, or for a review of your current payroll processes.