Add auto enrolment data from outside Xero payroll

If you have been assessing and enrolling your employees in your pension scheme using another product, set up pension information for your organisation in Xero before you add your employee details, and before you inform them about auto enrolment.

Set up your organisation

If you are connecting to Pension Sync for NEST or the People's Pension, we recommend watching these short videos about setting up.

  1. From the Settings menu, click Payroll Settings.
  2. Click the Workplace Pension tab.
  3. Add a Staging Date if doesn’t already appear.

    Your staging date must be entered into Xero even though it is in the past.

  4. (Optional) If you want to postpone assessment by up to 3 months, enter a Workforce Postponement Date. The date you enter in this field will be automatically added to all your employee records. If you do postpone you can go straight to inform your staff about automatic enrolment.
  5. Enter information for:

    • Pension admin details. This includes Signatory Information for Auto Enrolment if you choose to postpone auto enrolment assessment.
    • Payment accounts.
    • Pension filing due dates.
    • Pension details.
  6. Enter your Payment Defaults, which will apply to all your employees by default. You can customise them for each employee in their individual pay templates.
  7. Choose a Pension Type. Either:

    • Net Pay Arrangement - This option gives you two further options of either a normal pre-tax pension pay item (a deduction which is taken from salary before tax is calculated so tax relief is already applied), or a salary sacrifice pay item (a deduction from gross earnings which is taken from salary before tax and NI are calculated. Tax relief is already applied).
    • Relief At Source - This option creates only a post-tax pension pay item, a deduction which is taken from salary after tax and NI are calculated. Tax relief is applied via the employee’s percentage field.
  8. Tick the Yes checkbox for Calculate on Qualifying Earnings if the pension you have set up uses only employee earnings between the NI bands, Lower Earnings Limit (LEL) and Upper Earnings Limit (UEL), for calculation.
  9. Complete the Employee's Contribution fields:

    • Tick the checkbox for % of Gross.
    • If you have chosen a Net Pay Arrangement, set the Percentage at 1%. If you have chosen a Relief At Source contribution, the basic rate of tax (currently set at 20%) should be taken from the percentage. This means you should set the Percentage at 80%. Relief At Source pension schemes take 20% directly from HMRC as tax relief for the employee.
    • Select your Liability Account.
  10. Complete the Employer's Contribution fields:

    • Tick the checkbox for % of Gross.
    • Set the Percentage as 1%. Xero creates a benefit pay item for employer pension contributions using the value entered here. Relief At Source arrangements have no effect on the employer percentage so this value is not reduced.
    • Select your Liability Account and Expense Account.

      Percentages for employees and employers can be higher than the current minimums and are set to rise from April 2018.

      The Pensions Regulator (The Pensions Regulator website)

      Image showing payment defaults

  11. Click Save. You will see a green alert to say that we've created pay items for your organisation's pension scheme. These will be added to pay templates once your employees become eligible.

Set up your employees in Xero

Enter the employee details that you previously held in another product or location so that you have the correct pension deductions and opening balances.

Set up your employees

If you have been paying your employees in another payroll product since the beginning of the tax year, you will need to add opening balance figures for both your organisation and each of your employees. This includes Pension Deductions to date.

Add pension information for each employee

  1. In the Payroll menu, click Employees.

  2. Click the employee's name to open their details.

  3. Click the Taxes tab.

  4. Add the State Pension Age Date when your employee will be eligible to claim their state pension.

  5. (Optional) Enter a Postponement Date if your employee is currently in a postponement period with an end date sometime in a future Xero pay run.

  6. Add an Eligibility Status to confirm your employee's current eligibility for a pension scheme.

  7. Add an Eligibility Status Date to confirm either the date Eligible jobholders were automatically enrolled into the pension scheme, or if your employee is Non Eligible or Entitled, use the date they were assessed. Xero will continue to assess them in case they become eligible and need to be automatically enrolled in the future.

  8. (Optional) Tick the Yes checkbox if the employee is Currently in a Pension Scheme meaning:

    • they were already paying into a pension scheme before your staging date.
    • you do not want Xero to assess them for Auto Enrolment.

    Xero will set this for you once the employee is automatically enrolled into the pension scheme.

  9. (Optional) If your employee is excluded from auto enrolment, pick one reason from the Excluded from Auto Enrolment? dropdown menu even if there is more than one reason that applies. If you want to include the employee again in the future, select Do not exclude.

  10. (Optional) If your employee has opted out during the one month window at the start of their auto enrolment - select an Opt Out Reason from the dropdown menu and an Opt Out Date. If they have chosen to leave the scheme outside the one month opt out window, select Ceased Scheme and an Opt Out Date.

  11. (Optional) Add an Opt in Date to include default pay items for your pension scheme in your employee's pay template and to automatically take effect from the next pay run onwards.

    Any employee assessed and classified as a Non-Eligible jobholder or Entitled worker can still opt in to a pension scheme.

    Any Eligible jobholder who has previously opted out can also opt back in at any point in time.

  12. (Optional) Add a Pension Group if your pension provider asks you to classify your workers into groups.

  13. (Optional) Add a Pension Sub Group if your pension provider asks you to include a NEST payment source.

  14. (Optional) Add a Member Plan Number if your pension provider has allocated a member plan number for every employee who becomes a member of the scheme.

  15. Pension details under the Tax tab.

  16. Click Save.