Salary sacrifice pension in Payroll Accord

This guide provides an overview of how salary sacrifice works in Payroll Accord.

What is a salary sacrifice?

A salary sacrifice arrangement is an agreement to reduce an employee’s entitlement to cash pay, usually in return for a non-cash benefit.

How does this work with a pension?

An employer may offer the employee an option to sacrifice some of their salary into a workplace pension scheme. The contribution is then made to the pension company as if the employer is making the full contribution.
 

Salary sacrifice pension in Accord

Here’s a brief overview of how it’s processed:  

-The system displays the gross pay and calculates the pension contribution amount. 
- The pension is then deducted from gross pay before tax and National Insurance are calculated. 
- On the P60, you’ll only see the tax paid - not the gross salary or pension details. 
- On the payslip, you’ll see the actual salary, the pension deduction, and the taxable pay. This means the gross pay and taxable pay will differ. 

Please note that HMRC is only concerned with the taxable pay, not the gross pay. 
 
Please see an example below of an employee before salary sacrifice pension: 


Same employee with salary sacrifice pension: