IGPS on Payslips Explained for Employers

IGPS is a term that can appear on UK payslips, most often in connection with pension-related deductions processed through employer payroll systems. It is not a statutory label and it does not have a single, fixed industry-wide meaning. Instead, IGPS is typically an internal or system-generated payroll code whose precise meaning depends on how the employer’s payroll and pension scheme settings have been configured. Because the acronym is not defined in legislation or HMRC guidance, it can cause confusion for employees and create additional queries for HR teams who must be able to explain how pay and deductions have been calculated.

In many organisations, IGPS is used within payroll software as a generic or legacy label for one or more pension contribution categories. It will often, but not always, be linked to workplace pension contributions made under the employer’s pension scheme, including contributions made to comply with auto-enrolment duties under the Pensions Act 2008. However, because the term is internal rather than statutory, employers should always confirm how IGPS has been set up in their own payroll system rather than assuming that it refers to a particular standardised type of pension deduction.

What this article is about: This article explains what IGPS means when it appears on a payslip and how employers and HR professionals should interpret and manage IGPS entries within their payroll processes. It covers the role of IGPS as an internal payroll or pension code, how IGPS typically relates to workplace pension deductions, the duties employers have when itemising payslips under the Employment Rights Act 1996 and the compliance implications where IGPS is used to process auto-enrolment contributions under the Pensions Act 2008. It also sets out practical steps HR teams can take to communicate IGPS entries clearly to employees, how to review IGPS deductions for accuracy, how tax and National Insurance treatment can differ depending on the pension arrangement, and how to correct errors in a way that supports ongoing payroll and pensions compliance.

Section A: Understanding IGPS on a Payslip

IGPS is not a statutory payroll term and does not appear in HMRC or pensions legislation. It is an internal payroll-system label that may be generated automatically by payroll software or inherited from past configuration choices. Because IGPS is not standardised, its meaning varies between employers and software providers. In many cases, IGPS is linked to workplace pension contributions processed through payroll, including contributions made to meet auto-enrolment duties under the Pensions Act 2008. Employers must therefore understand how IGPS has been set up within their specific payroll environment so they can give employees accurate explanations and ensure that contribution calculations align with both scheme rules and statutory requirements.

Where IGPS appears on a payslip, it usually identifies a category of pension-related deduction or contribution. However, the employer should not assume that IGPS has a universal definition. Payroll and HR teams should confirm the label’s internal meaning, how it maps to pension provider records and whether it reflects employee contributions, employer contributions, salary sacrifice arrangements or legacy scheme classifications.

1. Definition of IGPS

In most payroll systems, IGPS operates as a system or employer-created label used to categorise pension contributions. The acronym does not have a single recognised industry definition. Instead, software providers may use IGPS as a placeholder or internal tag to distinguish particular pension contribution groups. Employers may also inherit the IGPS label from legacy payroll setups. In all instances, IGPS should be understood as an internal classification that generally relates to pension contributions but whose exact meaning must be confirmed within the employer’s own payroll configuration.

2. Why IGPS appears on payslips

IGPS appears when payroll software itemises deductions or contributions linked to the employer’s pension scheme. Because the Employment Rights Act 1996 requires all deductions to be clearly identified, payroll systems will show IGPS as a separate line whenever it is used as a category for pension contributions. In some systems, IGPS is a default code applied when a pension scheme was created using an older or generic template, or when a pension provider integration imports default labels. Employers should ensure that IGPS entries accurately reflect the underlying contribution rules, including contribution calculations based on qualifying earnings where required for auto-enrolment compliance.

3. IGPS vs standard pension codes

Standard pension codes typically use clear descriptions such as “Employee Pension Contribution” or “Employer Pension Contribution”. IGPS differs because it is an internal system label rather than a statutory or plain-language term. IGPS may distinguish between contribution types, including employee contributions, employer contributions, salary sacrifice deductions or legacy scheme categories. To maintain transparency and reduce employee confusion, employers should document what IGPS represents, ensure it aligns with pension provider records and consider renaming the code where the payroll system allows without disrupting statutory or provider reporting.

Section A Summary: IGPS is an internal payroll label usually linked to pension contributions, but it does not have a fixed industry meaning. Employers must confirm how IGPS is used within their specific payroll system, ensure the code aligns with pension provider mapping and maintain clear documentation so employees receive accurate explanations of IGPS entries on their payslips.

Section B: Employer and HR Responsibilities

Employers have statutory duties when issuing payslips, including the requirement to show and explain each deduction. When a payroll system uses an internal label such as IGPS, employers must be able to clarify its purpose and ensure it aligns accurately with pension scheme configuration and reporting duties. Because IGPS often relates to workplace pension contributions, HR and payroll teams must ensure the code is clearly documented, consistently explained and compliant with the Employment Rights Act 1996 and auto-enrolment rules under the Pensions Act 2008.

Clear communication is essential, particularly where internal or legacy codes remain in use following payroll migrations or changes to pension arrangements. HR teams should maintain up-to-date documentation explaining what IGPS represents, how it is calculated and how it maps to the employer’s pension provider records. This reduces employee confusion and strengthens the employer’s ability to demonstrate compliance during audits or disputes.

1. Ensuring clear payslip explanation

The Employment Rights Act 1996 requires employers to provide itemised payslips showing the amount of each deduction and, where deductions vary, a written explanation of the reason for the variation. Although the law does not prescribe the wording used, the employer must be able to explain the nature and purpose of every deduction, including any labelled as IGPS. If IGPS represents a pension contribution, HR teams must be able to confirm whether it reflects employee contributions, employer contributions, salary sacrifice deductions or other pension categories. Employers may choose to rename the IGPS code within the payroll system, provided this does not affect statutory reporting or pension provider mapping.

2. Communicating IGPS meaning to employees

Employees frequently query unfamiliar payroll codes. Where IGPS appears on a payslip, HR teams should provide a consistent explanation describing how the code operates within that employer’s payroll configuration. Employers can reduce repeated queries by including IGPS explanations in onboarding packs, payroll FAQs or pension scheme documents. Communication should be updated whenever scheme rules, contribution structures or payroll software change, ensuring that employees always receive accurate and up-to-date information.

3. Record-keeping and audit considerations

Pension contribution records must be kept for HMRC and The Pensions Regulator, including evidence that contributions have been assessed and processed correctly under auto-enrolment rules. Where IGPS is used as an internal identifier, employers should maintain documentation setting out its meaning, how it has been configured and how contributions linked to IGPS are calculated. Because IGPS may be exported through pension provider uploads or used in auto-enrolment worker assessments, incorrect mapping can create compliance failures. Regular internal audits help ensure IGPS codes remain accurate and aligned with current pension scheme and statutory requirements.

Section B Summary: Employers must ensure all payslip deductions, including those labelled IGPS, are clear, explainable and correctly documented. HR teams should maintain internal records, provide consistent communication to employees and verify that IGPS mapping supports payroll accuracy, statutory itemisation duties and auto-enrolment compliance.

Section C: IGPS and Pension Scheme Administration

Because IGPS is commonly used as an internal payroll code for pension-related deductions, its accuracy has direct implications for workplace pension compliance. Pension contributions processed through payroll are governed by the Pensions Act 2008, which sets out the employer’s auto-enrolment duties. These duties include assessing workers, enrolling eligible employees and ensuring minimum contributions are paid. Where IGPS is used to categorise or process these contributions, employers must ensure the code is correctly mapped and reflects the appropriate scheme rules, contribution levels and earnings basis.

Payroll configuration errors involving IGPS can lead to incorrect pension contributions, failed auto-enrolment uploads and non-compliance with reporting duties. It is therefore essential for employers to confirm how IGPS operates within their payroll system and to test contribution outputs regularly.

1. How IGPS codes relate to auto-enrolment

Auto-enrolment requires employers to assess each worker and automatically enrol eligible employees into a qualifying pension scheme. Minimum contributions must total at least 8 percent of qualifying earnings, of which the employer must contribute a minimum of 3 percent. Where IGPS is used to represent pension contributions within payroll, it must be linked accurately to the earnings basis used for auto-enrolment and mapped correctly to pension provider contribution fields. Incorrect mapping can cause assessment failures, incorrect uploads or underpayment of contributions, which may result in compliance action from The Pensions Regulator.

2. Understanding contributions linked to IGPS

IGPS may be used to record various types of pension contributions, including:

• standard employee contributions
• employer contributions
• salary sacrifice contributions
• legacy scheme or closed scheme contribution categories

Each contribution type has specific tax and National Insurance treatment. For example, contributions under a salary sacrifice arrangement reduce both tax and National Insurance; contributions under a net pay arrangement reduce taxable pay but not National Insurance; contributions under relief at source do not reduce taxable pay, with the provider adding tax relief separately. Where IGPS captures any of these contribution types, the payroll configuration must ensure correct treatment under PAYE and correct reporting to the pension provider.

3. Resolving errors in IGPS deductions

Errors can occur if IGPS is misconfigured, linked to outdated rules or applied to the wrong earnings basis. If an incorrect IGPS deduction appears on a payslip, the employer must identify the source of the error and correct future payroll calculations. Overpayments may require refunds to employees; underpayments may require additional contributions to the pension provider to avoid breaching scheme or auto-enrolment requirements. Employers should typically correct contribution errors in the next payroll run unless an urgent correction is necessary. It is often appropriate to consult the pension provider to ensure that adjustments are processed in accordance with scheme rules.

Section C Summary: IGPS plays a functional role in pension administration when used to process workplace pension contributions. Employers must ensure IGPS mapping aligns with auto-enrolment duties, pension scheme rules and correct tax and National Insurance treatment. Regular checks and prompt error correction help safeguard compliance and maintain accurate pension records for employees.

Section D: Payroll System Variations

Because IGPS is an internal payroll-system code rather than a statutory label, its meaning and usage vary significantly between payroll providers and employer configurations. Some employers inherit IGPS from legacy systems, while others find the label applied automatically during pension scheme setup or following software migrations. Understanding how IGPS is generated and processed within the employer’s payroll system is essential to maintaining clarity on payslips, ensuring accurate contribution calculations and supporting compliance with pension reporting duties.

Payroll systems may export IGPS codes when sending contribution files to pension providers, and incorrect mapping can result in errors in contribution uploads or worker assessments. Employers should therefore maintain documentation explaining how IGPS is used in their system and periodically review whether the label remains appropriate.

1. IGPS in different payroll software packages

Payroll platforms such as Sage, Xero, BrightPay, Iris and Moneysoft each have their own internal coding structures. Some systems use IGPS as a generic code to represent pension contribution categories, particularly if a pension scheme was created using a legacy or default template. Others may display IGPS when a pension provider integration imports default deduction labels that the employer has not yet customised. Employers should review payroll provider documentation and scheme setup screens to understand whether IGPS reflects a system default, a provider import or custom configuration.

2. Custom IGPS labels used by employers

Many employers use customised payroll labels, some of which may have been carried forward without review. IGPS may have been created manually by a previous payroll administrator or used to distinguish a particular scheme tier. Where the meaning is unclear, employers should confirm what the label represents and consider renaming it to reflect clearer pension terminology. Any renaming must ensure that contribution mapping, PAYE reporting and pension provider uploads remain unaffected.

3. When IGPS may indicate a legacy scheme

IGPS is sometimes linked to legacy or closed pension schemes that continue to process contributions through payroll. In these cases, IGPS may reflect an older internal naming convention that persists following software migrations, employer restructures or scheme closures. Employers should verify whether the label is still accurate, whether contributions linked to IGPS are being calculated correctly and whether employee materials need updating to reflect current scheme arrangements. Housekeeping reviews help prevent outdated labels from creating confusion or masking potential contribution errors.

Section D Summary: IGPS varies widely between payroll systems and employer configurations. It may represent a system default, a provider-imported label, a custom code or a legacy reference. Employers should document how IGPS is used, ensure accurate mapping to pension provider files and consider updating the label where this improves transparency without disrupting compliance.

FAQs

Employees often query IGPS because it is not a statutory or industry-standard term and can appear unfamiliar on payslips. These FAQs provide employers and HR teams with clear explanations grounded in payroll and pensions legislation so that employee queries can be handled consistently and accurately.

Is IGPS the same as a pension contribution?

In most payroll systems, IGPS is used as an internal label for pension-related deductions or contributions. However, the specific meaning depends entirely on how the payroll system has been configured. Employers should verify whether IGPS in their system represents employee contributions, employer contributions, salary sacrifice deductions or a legacy pension category. IGPS itself is not a statutory term and does not indicate a separate tax or charge.

Does IGPS affect tax or National Insurance?

Tax and National Insurance treatment depends on the pension contribution method associated with the IGPS entry. Under a net pay arrangement, contributions reduce taxable pay but not National Insurance. Under relief at source, contributions do not reduce taxable pay because providers apply tax relief directly. Under salary sacrifice, contributions reduce both taxable pay and National Insurance. The IGPS label does not change these statutory rules; it simply identifies which pension category the contribution has been assigned to within payroll.

Can IGPS be removed from a payslip?

Employers may be able to rename IGPS within their payroll system to make payslips clearer, provided this does not disrupt statutory reporting or pension provider mapping. Some systems treat IGPS as a fixed internal code, in which case employers should retain the label but provide clear explanations in onboarding materials, internal payroll guidance or pension scheme documents.

What should employers do if the IGPS amount looks wrong?

If an IGPS entry appears incorrect, employers should review payroll mapping, pension scheme rules and earnings calculations. Errors should usually be corrected in the next payroll run unless urgent correction is required. Underpayments may require additional contributions to the pension provider to avoid breaching scheme or auto-enrolment duties. Overpayments may require refunds or payroll adjustments in line with scheme rules. Employers should notify affected employees of the issue and confirm how and when corrections will be made.

Should employees be given a breakdown of what IGPS means?

Yes. Under the Employment Rights Act 1996, employees must be able to understand the purpose of every deduction shown on a payslip. Employers should therefore provide a clear explanation of IGPS wherever it is used. This may be included in onboarding information, employee handbooks, pension guides or internal payroll FAQs. Consistent explanations help reduce confusion and support statutory payslip transparency.

FAQs Summary: Employers must be able to explain IGPS clearly to employees. Although not a statutory term, IGPS often relates to workplace pension contributions, and its correct interpretation supports payroll accuracy, transparency and employee confidence.

Conclusion

IGPS is an internal payroll-system code rather than a statutory label, and its meaning depends entirely on how an employer’s payroll and pension arrangements are configured. Although the acronym often relates to pension contributions, it does not have a single industry definition. Employers must therefore confirm how IGPS is used within their own system, ensure the label aligns with workplace pension scheme rules and verify that contributions linked to IGPS are processed correctly in line with the Pensions Act 2008 and auto-enrolment duties.

Maintaining clarity around IGPS is essential for statutory payslip compliance under the Employment Rights Act 1996. Employers must be able to explain each deduction shown on a payslip, and internal codes such as IGPS should be supported by clear documentation and consistent communication. Regular payroll checks, accurate mapping to pension provider files and prompt correction of errors all help maintain transparency and ensure contributions are calculated and reported correctly.

For HR and payroll teams, documenting the meaning of IGPS, reviewing its configuration periodically and providing clear explanations to employees will reduce confusion, strengthen compliance and support accurate payroll administration across the organisation.

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