---
title: 4. Creating Pension Pay Elements
description: Pay elements are payslip items used to process in an employee's payslip.
---

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1. [Ocerli](https://support.ocerli.com/en/ocerli-knowledge-base?hsLang=en)
2. [Pensions](https://support.ocerli.com/en/ocerli-knowledge-base/pensions?hsLang=en)
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# 4. Creating Pension Pay Elements

## Creating Pension Pay Elements

If you have already got your pension pay elements set up, you can skip ahead to **steps 2 and 3.**

If you are processing a pension for the first time, you may need to set up new pension pay elements in line with your pension policy

Please follow the steps below to create an employee deduction type pension pay element.

**Step 1: Creating Pension Pay Elements**

<iframe src="https://app.tango.us/app/embed/82ce76bb-b546-4db0-be4e-14660ac3ff49?skipCover=true&amp;defaultListView=true&amp;skipBranding=false&amp;makeViewOnly=true&amp;hideAuthorAndDetails=true" style="position: absolute; top: 0px; left: 0px; width: 100%; height: 100%; border: none;" sandbox="allow-scripts allow-top-navigation-by-user-activation allow-popups allow-same-origin" security="restricted" title="Creating Pension Pay Elements" width="100%" height="100%" referrerpolicy="strict-origin-when-cross-origin" frameborder="0" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" allowfullscreen></iframe>

 

**Step 2: Updating AVC (Additional Voluntary Contribution) Pay Elements**

 

 

If you have existing pension pay elements for an additional voluntary contribution by your employees into a pension you will need to update them to indicate that they are an AVC. 

 

<iframe src="https://app.tango.us/app/embed/1cc3ba10-3c12-4a7d-b4af-1af0d382b476?skipCover=true&amp;defaultListView=true&amp;skipBranding=false&amp;makeViewOnly=true&amp;hideAuthorAndDetails=true" style="position: absolute; top: 0px; left: 0px; width: 100%; height: 100%; border: none;" sandbox="allow-scripts allow-top-navigation-by-user-activation allow-popups allow-same-origin" security="restricted" title="Update AVC Pay Elements" width="100%" height="100%" referrerpolicy="strict-origin-when-cross-origin" frameborder="0" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" allowfullscreen></iframe>

 

**Step 3 - Checking Your Pensionable Pay Element Settings**

The earnings to be used for calculating secondary pensions will be the same as the ones you use to calculate social security contributions.

These will include commission, bonuses, overtime payments and other such remuneration, for example tips collected by the Employer and shared out. The contributions should be calculated based on all the earnings up to the Upper Earnings Limit and will include and earnings below the Lower Earnings Limit.

<iframe src="https://app.tango.us/app/embed/2e9f9358-27d9-4cb1-b946-f54abcbc6d5e?skipCover=true&amp;defaultListView=true&amp;skipBranding=false&amp;makeViewOnly=true&amp;hideAuthorAndDetails=true" style="position: absolute; top: 0px; left: 0px; width: 100%; height: 100%; border: none;" sandbox="allow-scripts allow-top-navigation-by-user-activation allow-popups allow-same-origin" security="restricted" title="Check Pensionable Pay Element Settings" width="100%" height="100%" referrerpolicy="strict-origin-when-cross-origin" frameborder="0" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" allowfullscreen></iframe>

 

**Next Steps:** You can now use our enhanced Pensions Reporting to help with internal processes and report contributions to your pension provider. Our enhanced pensions reporting allows you to see a breakdown of employee’s pension contributions into the various providers and schemes you have created.

![pension reporting](https://support.ocerli.com/hs-fs/hubfs/pension%20reporting.png?width=670&height=346&name=pension%20reporting.png)

The **Secondary Pension Summary** provides a summary of all contributions reported in the secondary pension report.

![sec pension reporting](https://support.ocerli.com/hs-fs/hubfs/sec%20pension%20reporting.png?width=670&height=346&name=sec%20pension%20reporting.png)

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