Reply to: Pension contributions when working through an Umbrella

[ASB]

I'll see if I can do some digging

https://www.gov.uk/government/consul...nefits-in-kind

[northernladuk]

My guess would be:

Regarding the same big ones always coming up, If the Umbrella pay a person in a non-compliant fashion the agency would be liable. So why compliance check a small company when you can just pick the big players, I would guess they all charge similar amounts.

They also benefit from having a relationship with the company paying their temps, who earn them much more than any "kick back"

I'd like to think some are not in it for just the money, and small fry too.

You forget you are talking about agents here. They'd sell their own mothers false teeth if they could.

But if you like that nice thought then keep it. Am sure there are a few out there that fit your model.

[moggy]

If they have a completely inflexible list I am pretty sure the the vast majority will be. Why else would they be so inflexible? Particularly if it's the same big ones coming up.

My guess would be:

Regarding the same big ones always coming up, If the Umbrella pay a person in a non-compliant fashion the agency would be liable. So why compliance check a small company when you can just pick the big players, I would guess they all charge similar amounts.

They also benefit from having a relationship with the company paying their temps, who earn them much more than any "kick back"

I'd like to think some are not in it for just the money, and small fry too.

[lucyclarityumbrella]

I think therefore that there is a possibility of it being reviewed in due course.

I'll see if I can do some digging

[ASB]

Have you seen any government docs on this?

There was an hmrc consultation last august on salary sacrifice in general. This caused some changes. Hmrc then stated saliry sacrifice on pension would continue to be allowed as employer contributions.

I think therefore that there is a possibility of it being reviewed in due course.

[northernladuk]

i am sure not all agencies will be getting "kick backs" for their PSL - some will though i am sure.

If they have a completely inflexible list I am pretty sure the the vast majority will be. Why else would they be so inflexible? Particularly if it's the same big ones coming up.

[lucyclarityumbrella]

I wonder if the pension providers are offering a similar deal to the umbrella though? Umbrella "A" picks one provider.. for what reason.. why not make the payment into the personal scheme

We get nothing from the pension provider and I think there is some legislation against this or there is with IFA's. We stick with our group pension scheme so that it doesn't become an administrative nightmare for all parties, both with the pension provider uploads and pensions regulator when it comes to reporting requirements for it all. We also chose it as Scottish Widows have no exit fees, so once a contractor has finished their assignment, they are free to move it to existing pensions, or as we have seen many transfer across to the Scottish Widows one

[moggy]

i am sure not all agencies will be getting "kick backs" for their PSL - some will though i am sure.

I wonder if the pension providers are offering a similar deal to the umbrella though? Umbrella "A" picks one provider.. for what reason.. why not make the payment into the personal scheme

[northernladuk]

Actually, it sounds like it's your loss, not theirs.

Indeed. Agencies will be getting kickbacks from who they have on the PSL so no loss at all. Quite the opposite.

[TheFaQQer]

But, most umbrellas just can;t be arsed to let you pay more this way.

How many umbrellas have you asked to come up with the idea that "most" won't do it?

Contractor Umbrella will I think but my agency wont work with them (agencies loss).

Actually, it sounds like it's your loss, not theirs.

[lucyclarityumbrella]

But.....
Salary sacrifice is in the firing line. It may not last much longer on pension contributions.

Have you seen any government docs on this?

[psychocandy]

At the moment, umbrellas legally have to offer a pension. Great I thought, chance to save on employers NI, employees NI tax the lot.

But, most umbrellas just can;t be arsed to let you pay more this way. Sterling won't. I ended up with something crap like £10 employer contribution, £10 employee contribution.

Contractor Umbrella will I think but my agency wont work with them (agencies loss).

Not sure how much hassle it for agencies but surely they should make an effort? There should be no difference in take home so surely its in their interests to offer things like this. As well as childcare vouchers- some cant be bothered here either.

Unfortunately, it appears some umbrellas will just do absolute minimum for their money.

[Hobosapien]

This is a good overview, provided by Lucy at ContractorUmbrella, and gives some real world figures based on a £500/day rate.

So you want to save tax using an umbrella company pension? :: Contractor UK

[ASB]

Salary sacrifice gives a very real saving since the money doesn't get charged to ni whice personal contributions from salary will have been.

In effect double savings since ers ni is saved too. In a proper umbrella scenario thatcash of course comesout ofyour rate

But.....

Salary sacrifice is in the firing line. It may not last much longer on pension contributions.

Personal schemes can accep employer contributions but must know. Theg can of course choose not to.

[TheFaQQer]

Pension contributions can be made via salary sacrifice into the group pension scheme (giving you tax and NI savings), they cannot be paid the same way into your personal scheme. You would have to make that contribution from your net pay, the go down the route of claiming it via SA.

HTH

They can be paid into a personal scheme, but most (probably all) umbrellas choose not to do that. But there is nothing that prevents your employer paying into an existing scheme.