Loans and Save Schemes

You are able to set up a relationship with an increasing/decreasing balance each period, such as Cycle to Work schemes, or Christmas saving initiatives.

Here we will use Cycle to Work as an example.

It is important that a backup is taken prior to adding/modifying pay elements (File>Back up data)

Navigate to ‘System>Maintain elements of pay>Quick relationship tool’

Select ‘Loan’ -

Name of ‘Outstanding amount’ field - this is the ‘Balance’ of the loan - Note that a shortname is not usually required, the system will use the next available field number (F number) if a shortname is not specified.

For Cycle to Work we will just be using the ‘subtract’ fields. However, if you wanted set up a save scheme you would need to select: ‘Do you want a field to add amounts to the balance of the loan? Using these fields will work in the same way as the below but add to the balance, rather than subtract.

For Cycle to Work we want to ensure that only the balance of the loan is taken and nothing more. Selecting ‘Should the balance always be positive’ will ensure the final payment will only deduct the remaining payment. If the balance field is 0 no deduction will be taken.

The tool will then prompt you to add the fields to a desired display view -

·         Balance – Value of the cycle loan to be paid back.

·         Deduction – This will automatically populate from the standard deduction each period.

·         Standard Deduction - The standard level of the deduction to be taken each period – i.e if the Cycle to Work loan [YM1] was 1,000 and you wanted this to be paid back over 12 months, the value of 83.33 would be entered here.

If an employee wanted to pay back more than the standard deduction in a standalone period, you can amend the deduction field. In the following pay period the deduction will revert to the value populated in the standard field. The standard deduction value is manually maintained.

By default, the system will add the deduction as a Net deduction, as most Cycle Schemes are salary sacrifice, a gross deduction relationship needs to be added.

Navigate to ‘System>Maintain elements of pay>Maintain relationships>Deduction from gross>Add’ here select the newly created period and standard values from the drop-down:

As the ‘Cycle scheme’ element now exists in both ‘Deduction’ and ‘Gross deduction’ it needs to be removed from the default ‘Deduction’ relationship.

Navigate to ‘Deduction’, highlight the newly created ‘Cycle Scheme’ element and ‘Delete’.

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