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Helping your employees make extra contributions to their pension is a great way to support their future financial wellbeing. Whether they want to increase their ongoing payments or make a one-off lump sum, you can help them maximise their retirement savings—and take advantage of valuable tax benefits along the way.

There are two main ways your employees can pay more into their pension:

1. Increase regular pension contributions

2. Make an ad-hoc lump sum payment
    

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How to increase regular pension contributions

• Your employee can increase their regular workplace pension contributions at any time
• If your scheme supports it, employees can do this easily by logging in to the Cushon app and selecting the relevant option. Alternatively, they can speak to you (or your HR/payroll contact) and ask for the increase to be processed via payroll
• When a request is made in the Cushon app, you’ll receive an email as the employer
• At the next pay run, update the contribution percentage in your payroll system. This is usually done by editing the employee’s record in payroll software such as Sage, IRIS, or Brightpay. Check your specific software’s help guide for detailed instructions
   

How to make a one-off lump sum payment

• An employee might want to contribute a one-off extra payment—perhaps from a bonus or other additional income—into their pension
• If you offer Salary Sacrifice at your company, one-off payments made this way can save both tax and National Insurance for you and your employee
• This is usually processed before tax and National Insurance are deducted, helping them get full tax relief
• Important: Employees must let you know before the lump sum is processed, so the extra payment is included as a pension contribution
• Contact your payroll provider for guidance on processing ad-hoc payments as pension contributions.
• When you upload your next pension contribution file after the relevant pay run, make sure you include the additional payment in the lump sum column. For step-by-step instructions, see:
  • What is the Cushon upload file used for in the Cushon Employer Portal?
  • What is the PAPDIS file used for in the Cushon Employer Portal?

Be aware of the annual allowance

Employees should remember there’s a limit to how much can be paid into their pension each tax year—this is called the annual allowance.

• The standard annual allowance is £60,000 for most people in the current tax year (based on official guidance including MoneyHelper)
• If an employee has started flexibly accessing their pension, a lower Money Purchase Annual Allowance (MPAA) of £10,000 may apply.
• Employees may be able to “carry forward” unused allowance from the previous three tax years to boost their contributions with no tax charge

If your employee isn’t sure what allowance applies to them, encourage them to check with a financial adviser or visit MoneyHelper for more information.