Contractor Pension

[Tasslehoff]

I have just been emailed by my Umbrella as I start my gig next week (Parasol btw)

Asking about Pensions. I have never joined one before and I know I should.

However the Email is very appealing and talks about tax breaks. Does this mean tax breaks just for the money that I dedicate to the pension or towards my actual take home pay as well?

Is this generally a good idea? I have scheduled a call to chat to them but I imagine they are going to push me towards it so I could use a second opinion.

[northernladuk]

<sigh>

https://www.google.co.uk/search?q=pe...hrome&ie=UTF-8

[Tasslehoff]

<sigh>

https://www.google.co.uk/search?q=pe...hrome&ie=UTF-8

You mean I have to read loads of stuff .. not just have someone tell me..


/sigh

Fair enough..

[northernladuk]

You mean I have to read loads of stuff .. not just have someone tell me..


/sigh

Fair enough..

Life sucks doesn't it

[CoolCat]

You get tax relief on your pension contribution, but it will be taxed when you eventually take it out. But if you pay 40% tax now and a lower rate when you are a pensioner you should do better.

Also the money you pay into the pension does not need national insurance paying on it.

However the Parasol associate company that "sells" you the pension will rake off a commission they are not doing it for free.

Biggest problem I had with it was Parasol would pay the pension in preference to outstanding expenses which killed its merits for me.

Also you need to pick a fund within the pension scheme that makes good investment decisions over time, you can either try luck, spread your chances, or put some work into your choices.

[Tasslehoff]

You get tax relief on your pension contribution, but it will be taxed when you eventually take it out. But if you pay 40% tax now and a lower rate when you are a pensioner you should do better.

Also the money you pay into the pension does not need national insurance paying on it.

However the Parasol associate company that "sells" you the pension will rake off a commission they are not doing it for free.

Biggest problem I had with it was Parasol would pay the pension in preference to outstanding expenses which killed its merits for me.

Also you need to pick a fund within the pension scheme that makes good investment decisions over time, you can either try luck, spread your chances, or put some work into your choices.

Silly question I know, but this does not affect you take home pay taxation (excluding any contributions obviously), just how effective your pension contributions are?

[Clare@InTouch]

Silly question I know, but this does not affect you take home pay taxation (excluding any contributions obviously), just how effective your pension contributions are?

Paying into a pension can effect your take home pay because the gross value of the contribution increases your basic rate tax band. Pay £8,000 into a pension and instead of paying 40% tax at £41,450 you'll pay 40% at £51,450. An extra £10k at 20%.

You'd save more all round if you just went Limited of course


Btw - Tasslehoff, there's a blast from the past! Dragons

[Tasslehoff]

Paying into a pension can effect your take home pay because the gross value of the contribution increases your basic rate tax band. Pay £8,000 into a pension and instead of paying 40% tax at £41,450 you'll pay 40% at £51,450. An extra £10k at 20%.

You'd save more all round if you just went Limited of course


Btw - Tasslehoff, there's a blast from the past! Dragons

Thanks, makes sense now!

An aside I know. but I do intend to go limited, my first contract I thought it might be a bit much to go Limited as well. On my next contract I intend to switch.

Tasslehoff was always my favorite as a kid, growing up though it obviously changed to Rastilin

[northernladuk]

Btw - Tasslehoff, there's a blast from the past! Dragons

The OP appears to have some of the characteristics of a Kender.

[LisaContractorUmbrella]

I have just been emailed by my Umbrella as I start my gig next week (Parasol btw)

Asking about Pensions. I have never joined one before and I know I should.

However the Email is very appealing and talks about tax breaks. Does this mean tax breaks just for the money that I dedicate to the pension or towards my actual take home pay as well?

Is this generally a good idea? I have scheduled a call to chat to them but I imagine they are going to push me towards it so I could use a second opinion.

I believe that your umbrella company has already passed its staging date for auto-enrolement and therefore they should have advised you that you are already enroled in their pension scheme