Reply to: New Contractor. Pension recommendations?

[northernladuk]

Has anyone set up a contractor pension plan through the limited company with another organisation, such as Aviva?

Is it possible?

Thanks

They'd go bust if you couldn't.

Check the Aviva page. There is a nice section called 'Can you take out a pension with us?'

Instead of asking a very generic question like that you'd be better researching the costs of SIPP on an online table. Find one that looks interesting and then go browse their offering along with T&Cs on their site.

[illy]

contractor pension not a SIPP

Has anyone set up a contractor pension plan through the limited company with another organisation, such as Aviva?

Is it possible?

Thanks

[Hobosapien]

I expect most brollies will have a company pension scheme set up but will not be able/willing to also sort out contributions to an individual's SIPP due to the additional overhead that would require a different fee structure. Maybe there are brollies specialising in that flexibility but then you have to check they're offering that and the standard brolly services at a reasonable cost and don't have a negative reputation for any reason.

I think it's possible to transfer out of the brolly's company scheme when you have finished using the brolly, so can then transfer into a SIPP if that appeals.

Personally I have several pension pots that I have mulled over transferring them all to one SIPP but as long as the fees are reasonable and comparable then I treat it as risk diversification, though surely SIPP and pension providers are safe hands.

[northernladuk]

Hi

I’m thinking of setting up a SIPP as well as holding my umbrella company pension. I am, currently, contributing very little and being matched up to 3% by the umbrella company pension scheme. I want to contribute a further 12% to a SIPP so hold a company pension and a SIPP. I enquired about this to my Umbrella Company but they said that they did not offer that option of transferring the 10% to a SIPP prior to taxed figures.

Can anyone advise whether this is possible or not on pre-tax figures so as to benefit from tax relief?

I hope this is the right thread for this

Many Thanks
B

You'd probably have been better starting a new thread as you situation involves a brolly but it's out there now so...

Here is a thread that looks like the same question... but doesn't appear to have been answered.

https://forums.contractoruk.com/umbr...pp-scheme.html

It looks to me you could be on a hiding to nowhere so would default to Muskippers advice in post 3 which says,

Self-invested personal pensions | The Pensions Advisory Service

"Although your employer may choose to contribute to your SIPP, there is no obligation that they do so."

Have you asked if they will pay it into a SIPP of your choosing? If they won't, I'd feel inclined to look for a new brolly who will.

Contractor Umbrella allow unlimited payments in to their scheme. If you are able to change they might be worth looking at. If you are via an agency that has an approved list of 4 or 5 you could be struggling.

Here is some info about the Contractor Umbrella offering.
https://www.contractorumbrella.com/pension.html

[Irishbar]

Company Pension and SIPP

Hi

I’m thinking of setting up a SIPP as well as holding my umbrella company pension. I am, currently, contributing very little and being matched up to 3% by the umbrella company pension scheme. I want to contribute a further 12% to a SIPP so hold a company pension and a SIPP. I enquired about this to my Umbrella Company but they said that they did not offer that option of transferring the 10% to a SIPP prior to taxed figures.

Can anyone advise whether this is possible or not on pre-tax figures so as to benefit from tax relief?

I hope this is the right thread for this

Many Thanks
B

[Fred Bloggs]

Has anyone used the services of Contractor Wealth?

They have recommended I invest in a broad range of products ie cash, commercial property, equity investment.

My accountant, SJD, recommended them. Had a few phone calls with them and have a plan in place but their fees are quite high.

What’s the consensus?

There will be no consensus here other than to avoid the industry thst is largely built on ignorance and laziness. Do your own research and make the money for yourself rather than a firm of advisors. A person with a contractor mind set should find that easier to do than your average bloke in the street, I would say.

[Move D]

Contractor Wealth for pension advice - anyone used their services?

Has anyone used the services of Contractor Wealth? -
They have recommended I invest in a broad range of products ie cash, commercial property, equity investment.

My accountant, SJD, recommended them. Had a few phone calls with them and have a plan in place but their fees are quite high.

What’s the consensus?

[Hobosapien]

How can it be above board paying 50K for some admin work? The common sense question is would you pay someone you don't know the same package and the answer is would you balls so it's clearly aggressive avoidance.

Yes, there are two aspects, the rules that allow pension contributions via salary sacrifice and ensuring the employee's circumstances mean HMRC will have no problem with it.

So while a few hours a week admin work wouldn't cut it the employee could be given other roles that would mean their relative little time would be worth a lot more to the company so pay could increase appropriately. e.g. R&D of plan B's to whatever depth would be worthwhile to the company to warrant such payment.

There is usually a way of fulfilling the rules to HMRC's satisfaction so a call has to be made on whether to invest the required effort against the likely rewards. Especially if there are other simpler to achieve avenues of getting to a similar end point.

[WordIsBond]

OP, is your wife a director or secretary? If not and you are paying her a salary she's an employee, and you may also have to do pension auto-enrolment.

You really need to nail down what her status is.

[northernladuk]

I40k pension and 10k take home is ok in principal (if all else is above board) as the overall salary the individual has received is 50k. The rule as I understand it is the salary sacrifice can't take the employee below minimum wage. Ignoring that minimum wage doesn't apply for directors though if used in this way it may do.

How can it be above board paying 50K for some admin work? The common sense question is would you pay someone you don't know the same package and the answer is would you balls so it's clearly aggressive avoidance.

[Hobosapien]

What? Of course its an issue. Look at the furore around IR35 at the moment.

Any ways around it is going to get caught by GAAR I would have though. 40k pension to someone earning 10k is just a blatant piss take from a tax perspective.

I am ignoring IR35 for this purpose as it's not relevant if operating as if inside IR35 in terms of PAYE and what portion gets salary sacrificed into a pension.

40k pension and 10k take home is ok in principal (if all else is above board) as the overall salary the individual has received is 50k. The rule as I understand it is the salary sacrifice can't take the employee below minimum wage. Ignoring that minimum wage doesn't apply for directors though if used in this way it may do.

[Lance]

in a world where companies pay inordinately large amounts for relatively little actual work, such as consultancy.

In that case someone else is paying for it (the customer) so it IS a justified income. The problem comes when the income is 'justified' by someone who's not independent and has a financial incentive to over-inflate the value.

[northernladuk]

Ah, so we 'get away with it' because we earn it in the first place from the contract so how it's paid out in minimum wage and pension contributions is less of an issue.

Probably ways around it without breaking the rules, in a world where companies pay inordinately large amounts for relatively little actual work, such as consultancy.

What? Of course its an issue. Look at the furore around IR35 at the moment.

Any ways around it is going to get caught by GAAR I would have though. 40k pension to someone earning 10k is just a blatant piss take from a tax perspective.

[Hobosapien]

Ah, so we 'get away with it' because we earn it in the first place from the contract so how it's paid out in minimum wage and pension contributions is less of an issue.

Probably ways around it without breaking the rules, in a world where companies pay inordinately large amounts for relatively little actual work, such as consultancy.

[northernladuk]

Not sure that's correct. As long as she is an employee on PAYE then surely she can take advantage of salary sacrifice pension contributions up to the annual limit of £40k regardless of actual real earnings. So while she is actually only taking home £8k the overall earnings on paper for HMRC's perusal will include the salary sacrifice portion.

This is what many of use via brollies are doing.

If only a director and shareholder but not employed on PAYE then yes that would be dodgy.

Nope.

To be commensurate and fully deductible, the spouse’s remuneration must be in line with what the employer would pay to any unrelated third party for such work, and which would be commercially reasonable bearing in mind the employee’s responsibilities, skills, experience, hours, etc. If not, any excess would be disallowed as a trading expense. It should be the reward for their work, not a shifting of income from the full-time working spouse.*