Reply to: Pension contributions from employer

[TheFaQQer]

sorry - just caught up on the other posts

yes it is the money still in the company account - I assume that is retained funds

I thought you could pay pension to previous FY

We have paid all corporation tax due so far

You can pay from this year into the previous year's pension allowance (assuming that the scheme was in operation at the time, which yours would appear to have been). You cannot retrospectively make a payment from last year's company year now that the trading year has ended.

[John Lane]

sorry - just caught up on the other posts

yes it is the money still in the company account - I assume that is retained funds

I thought you could pay pension to previous FY

We have paid all corporation tax due so far

[John Lane]

i'm ok with the idea that auto enrollment does not apply

Lets assume no accountant for now

It's about 3K for last fy and 1.9K for this fy

[TheFaQQer]

What I want to do is pay some money from the company from last FY and this FY into her existing Old Mutual pension.

You won't be able to make a payment now out of last year's company accounts. You can pay out of retained funds for this year though.

[northernladuk]

You know auto enrolment doesn't apply? How much will you be paying to your wifes pot?
Do we assume there is no accountant in the picture?

[John Lane]

Pay pension contribution to wife, employed by company, 20% shareholder

So i've read this thread and some others on contractor uk relating to pensions.

What I want to do is pay some money from the company from last FY and this FY into her existing Old Mutual pension.

Company circumstances

Director 80% shareholder
Wife/Admin/bookkeeping etc 20% shareholder (no other titles/responsibility) - Salary approx £200/month
Company had been trading since july 2016

I get the idea that auto enrolment just means admin hassles.

The company wants to pay my wife a pension contribution as 2 lump sums, equal to or less than salary paid to a pension that amalgamated pension from several employers into one by Old Mutual.

So just get the payment details from Old Mutual, send the money in two lumps, letting them know it is a company contribution and not to reclaim tax on it.

Is that likely to be ok.

Company director does not need/want pension contributions at present.

[Maslins]

I recently spoke to my accountant regarding this. He says that contributing pensions through auto enrollment scheme is free of charge and that SIPP providers charge a fee. Could you let me know what additional features does a SIPP offer? Is it worth the cost?

Hmmm...pensions are on the edge of a typical accountant's expertise, but I don't think the above is necessarily true.

If you're a contractor, my view would be you want to avoid auto enrolment if you can. AFAIK auto enrolment is basically just about forcing you/your company to pay a minimum amount each month, based on salary, with lots of submissions and admin crap going along with it. Opting out doesn't mean you can't contribute to a pension, just means you can do it as/when you see fit.

If a pension is investing funds in a certain way there will likely be some kind of charges linked to that. This is where you get the debate about active vs passive management, with most people seemingly thinking passive (ie auto follows the FTSE/whatever, not relying on some expert to out guess the market) is better, as they typically have lower charges.

[SueEllen]

Thanks. So, it appears like even if I choose auto enrollment, there is an Annual Management Charge (AMC) that I need to pay as an employee. From the link you had provided, this varies between 0.30% to 0.75%. I now need to compare this against fees charged by SIPP providers.

I would also check what you can invest in.

[suresh505]

You may find this charges comparison useful:-

Auto enrol charges

Thanks. So, it appears like even if I choose auto enrollment, there is an Annual Management Charge (AMC) that I need to pay as an employee. From the link you had provided, this varies between 0.30% to 0.75%. I now need to compare this against fees charged by SIPP providers.

[Darren at Fox-Bartfield]

Charges

I recently spoke to my accountant regarding this. He says that contributing pensions through auto enrollment scheme is free of charge and that SIPP providers charge a fee. Could you let me know what additional features does a SIPP offer? Is it worth the cost?

You may find this charges comparison useful:-

Auto enrol charges

[suresh505]

It might be better for you to setup personal arrangements that the company then makes employer based contributions to. This would be easy to do and would allow you to control the contributions as well as the way that they are invested.

I recently spoke to my accountant regarding this. He says that contributing pensions through auto enrollment scheme is free of charge and that SIPP providers charge a fee. Could you let me know what additional features does a SIPP offer? Is it worth the cost?

[Patrick@Intouch]

You might find this link useful:

https://automation.thepensionsregula.../notanemployer

[Patrick@Intouch]

I think that is probably the best thing to do in my scenario. In the pension regulator's website, it only mentions the salary details (and age) to decide if auto enrollment is applicable or not. Can I assume that both the directors can be exempt from auto enrollment even if we receive a salary (£11,500 each) ?

As long as:

all employees are directors without contracts of employment (you won't have or I assume you would know about it) then the company has no responsibility under auto enrolment.

If you are unsure about the online notification to the pensions regulator then you could try giving them a call.

[ASB]

A minor point on company contributions is to make sure your provider will take company contributions and also that they know any given contribution is a company contribution.

[suresh505]

As you are both director's then your company actually has no responsibility under auto enrolment and you can advise them of that fact on the pensions regulator website.

It might be better for you to setup personal arrangements that the company then makes employer based contributions to. This would be easy to do and would allow you to control the contributions as well as the way that they are invested.

I think that is probably the best thing to do in my scenario. In the pension regulator's website, it only mentions the salary details (and age) to decide if auto enrollment is applicable or not. Can I assume that both the directors can be exempt from auto enrollment even if we receive a salary (£11,500 each) ?