Pension opt out umbrella vs agency

[mrdarcey]

Hi all

My current contract is through an umbrella company, I had opted out of pension when I started, which added 3% to my daily rate (employer contribution, but effectively from umbrella rate)

I am considering a new contract only being offered on a PAYE arrangement via the end client, through an agency.

The terms offered include a 3% employer pension contribution.

My question is, if I do opt-out in that case, would the same still apply and 3% gets added to the daily rate? Or is that only applicable in the umbrella case, and I'd losing the 3%?

I am not in a position to raise the question with the client/agency yet, hence seeking some clarification here.

Appreciate that opting out might not seem like the best financial decision, but I have my reasons.

[hobnob]

I assume this would be the same as a permanent job: if you opt out (i.e. you don't want to pay 5%) then your employer is off the hook and they don't have to pay the other 3%, i.e. you won't get any extra money.

[mrdarcey]

I assume this would be the same as a permanent job: if you opt out (i.e. you don't want to pay 5%) then your employer is off the hook and they don't have to pay the other 3%, i.e. you won't get any extra money.

But given that it's through an agency, isn't there the fact that the end client would still be paying the fee, including the 3% regardless, to the agency?

Since the opting out is basically an arrangement between myself and the agency.

[Andy2022]

But given that it's through an agency, isn't there the fact that the end client would still be paying the fee, including the 3% regardless, to the agency?

Since the opting out is basically an arrangement between myself and the agency.

If the 3% is paid to you via PAYE then employers NI will be due on it too

[WTFH]

You might want to ask your employer in this case how they would handle it.

[eek]

As WTFH happens says you would need to ask the agency (your employer) but they are going to take the extra profit...

[mrdarcey]

Thanks all. I've raised it with agency and will see, though I think something doesn't add up either way.

The rate they quoted had a 3% employer pension contribution on top, which the end-client would pay as part of the assignment rate, this was clearly presented as 3% of the day rate. However, when the agency sent the paperwork, the 3% is on qualified earnings only - this is in relation to auto enrolment and is capped at £847 a week (£967 - £120)

So on an example rate of 500pd, or £2500 weekly, I would have expected employer contribution to be £75, as opposed to £25 (£847 * 0.03)

I might have misunderstood something here, but thanks again for your replies.

[WTFH]

Thanks all. I've raised it with agency and will see, though I think something doesn't add up either way.

The rate they quoted had a 3% employer pension contribution on top, which the end-client would pay as part of the assignment rate, this was clearly presented as 3% of the day rate. However, when the agency sent the paperwork, the 3% is on qualified earnings only - this is in relation to auto enrolment and is capped at £847 a week (£967 - £120)

So on an example rate of 500pd, or £2500 weekly, I would have expected employer contribution to be £75, as opposed to £25 (£847 * 0.03)

I might have misunderstood something here, but thanks again for your replies.

OK, I'm slightly confused, but suspected I might be, which is why I said that you need to ask your employer.
Is it the end client who has said they would pay you a 3% pension contribution, or is it the agent?
If the agent is offering you 3% contribution, then it's not the end client.
If it's the end client that is offering it, then it's not the agent.

I realise you state "I have my reasons" for not wanting to pay into any pension, but if the reasons are about eeking out an extra few pounds (before tax), then I'd suggest cancelling Netflix/Sky/whatever will give you more in your personal account than the hassle and short term "saving" you might make by not having a pension.

[mrdarcey]

OK, I'm slightly confused, but suspected I might be, which is why I said that you need to ask your employer.
Is it the end client who has said they would pay you a 3% pension contribution, or is it the agent?
If the agent is offering you 3% contribution, then it's not the end client.
If it's the end client that is offering it, then it's not the agent.

Thanks for getting back. The end-client pays everything (rate + holiday + 3% pension), but I have to go through an agency. As for the logistics of it, it might be that the agency pays some of that and bills the end-client for it. But ultimately the client is paying the fee.

[WTFH]

Thanks for getting back. The end-client pays everything (rate + holiday + 3% pension), but I have to go through an agency. As for the logistics of it, it might be that the agency pays some of that and bills the end-client for it. But ultimately the client is paying the fee.

Is the end client paying you directly?