Following a valuation an employer in the Fund may find that they are in a surplus position. You can verify if you are in surplus by checking your valuation report.
If you are in this position, you are eligible to offset this amount against your employer contributions in line with the following scheme rules:
- In each cumulative pay period you may offset up to 1/12th of your surplus figure up to a maximum value equal to your employer contributions for the period.
- You may not offset against employee contributions as there is a legal requirement that they always be passed to the Fund.
Adjustments to your monthly i-Connect submission
A surplus should not change the contribution amounts you include on your monthly i-Connect submission which must be included in full.
A surplus will create a tolerance breach which must be explained by typing the surplus or deficit adjustment in the ‘Reason for difference’ text box on the i-Connect Payroll dashboard.
Find out about your i-Connect Payroll submission and payment
Examples of surplus offsetting
Example 1 for an employer on 20% contribution rate:
Annual Surplus: £12,000
1/12th: £1,000
Total pay for period: £20,000
Employee Contributions (average 6% for this example): £1,200 (a)
Employer Contributions @ 20%: £4,000 (b)
Surplus Offset: -£1,000 (c)
Payment Due: £4,200 (a+b-c)
Example 2 for an employer on 20% contribution rate:
Annual Surplus: £60,000
1/12th: £5,000
Total pay for period: £20,000
Employee Contributions (average 6% for this example): £1,200 (a)
Employer Contributions @ 20%: £4,000 (b)
Surplus Offset: -£4,000 (maximum equal to employer contributions) (c)
Payment Due: £1,200 (a+b-c)