DIY Pensions for a Limited Company?

[northernladuk]

Hi, first post on this thread.

I have a PSC (Ltd co) of which I am sole director, my wife and I the only employees. Does anyone know if I can avoid the requirement to start up a pension for either or both of us if I make her a director (I am currently sole director? We are 50/50 shareholders.

I do the usual contracting thing - pay myself c£10k, wife c£7.5k, then take out divi's.

The Pension Regulator rules are in gobbledegook!

Are you really employees?

I'm not sure paying the wife for nothing is the 'usual thing'

[BR14]

Have you asked your accountant? you Do have one?

[Dmac]

I do have an accountant - he said he cannot advise, and to read the regulations (they appear a minefield).

I pay the wife as she does all my admin, invoices, chasing payments, liaising with my accountant, etc.

Only I had heard that where the employees are also directors, there is no requirement to offer a pension.

[northernladuk]

I do have an accountant - he said he cannot advise, and to read the regulations (they appear a minefield).

That doesn't look right. He can't advise on investing or choice of pension but he can tell you what you are to the company and how it affects your finances surely. He should be able to say who's employed, who's not and how that set up is affected by the legislation. I'm guessing he's not a contractor specialist.

I pay the wife as she does all my admin, invoices, chasing payments, liaising with my accountant, etc.

Of course she does. If she wasn't available would you pay some random the same money for those tasks?

Only I had heard that where the employees are also directors, there is no requirement to offer a pension.

You need to understand who's an employee and who isn't. It will make it much clearer. There are plenty of guides on the Web explaining about what the director of a one man band is and how the pension rules apply. I'm pretty sure some of them go in to the wife's situation which will be your answer. It's something that affects (Hint: or not) all of us business owners so it is well documented.

Get your PA digging around on Google and see what she can find.

[Dmac]

That doesn't look right. He can't advise on investing or choice of pension but he can tell you what you are to the company and how it affects your finances surely. He should be able to say who's employed, who's not and how that set up is affected by the legislation. I'm guessing he's not a contractor specialist.



Of course she does. If she wasn't available would you pay some random the same money for those tasks?



You need to understand who's an employee and who isn't. It will make it much clearer. There are plenty of guides on the Web explaining about what the director of a one man band is and how the pension rules apply. I'm pretty sure some of them go in to the wife's situation which will be your answer. It's something that affects (Hint: or not) all of us business owners so it is well documented.

Get your PA digging around on Google and see what she can find.

Many thanks for this. My accountant has said that if the employees are both directors without an actual employment contract, then the co may not be obliged to offer a pension - but then goes on to say they are not able to advise on what the company's obligations are.

But your response is helpful - I will do some more digging!

[northernladuk]

Many thanks for this. My accountant has said that if the employees are both directors without an actual employment contract, then the co may not be obliged to offer a pension - but then goes on to say they are not able to advise on what the company's obligations are.

But your response is helpful - I will do some more digging!

To be honest there are tons of articles out there on this

Bearing in mind this is an accountancy site giving generic advice I'm surprised your account can't answer you.

[Maslins]

Many thanks for this. My accountant has said that if the employees are both directors without an actual employment contract, then the co may not be obliged to offer a pension - but then goes on to say they are not able to advise on what the company's obligations are.

I think they're right. My understanding is directors aren't automatically "workers" from the perspective of auto enrolment.

If the only people on the payroll are directors, then generally speaking you should be fine to complete this link to opt out of auto enrolment completely. I'm sure there are plenty of exceptions, but in your case this should be fine.

[Juninho]

SIPP - Pension Bee

I have read through this and other threads and I think what is best for me is to open a pension where i pay directly out of my company (employer contributions) into a SIPP.

Looking online for some providers - PensionBee and NutMeg both seem pretty reasonable.

PensionBee looks like it is 0.5% (I'd just go for a tracker for now to keep it simple and i'd want to just put in one lump sum a year).

Am I right in thinking those are the best options?

Or do people prefer the fixed annual fee of someone like ii (where i am a bit confused by the 'quarterly' charge).

[northernladuk]

What do you want? Easy trading, cheap fees, big company? Depends what your criteria is an who fills it?

There are comparisons of charges online which will allow you to pick the best ones for your level of investment.

[Fred Bloggs]

I have read through this and other threads and I think what is best for me is to open a pension where i pay directly out of my company (employer contributions) into a SIPP.

Looking online for some providers - PensionBee and NutMeg both seem pretty reasonable.

PensionBee looks like it is 0.5% (I'd just go for a tracker for now to keep it simple and i'd want to just put in one lump sum a year).

Am I right in thinking those are the best options?

Or do people prefer the fixed annual fee of someone like ii (where i am a bit confused by the 'quarterly' charge).

If you want a tracker fund in your SIPP, you really do not want to be paying a platform 0.5% for the privilege. For per cent fee platforms look at Close Bros (0.25%) or a flat rate platform like Interactive Investor. For smaller pots, the former is more attractive than the latter. Also, be aware that Vanguard have publicly stated they will have their own SIPP available before the end of 2018. For holding a tracker fund, they are likely to blow the competition out of the water on running costs.