Reply to: Salary sacrifice time delay

[Protagoras]

Clarity used to work that way -

I understood that they still did - is that no longer the case?

[WTFH]

Clarity used to work that way - it’s very much a question of how and who handles processes. Larger umbrellas will have tasks set out so 1 set of people do payments, 1 do expense approval another do pension payments

And to add to that, each month has to be calculated, unlike in permidom where your annual salary is agreed, and then all monthly payments/deductions/SalSac are calculated as 1/12th of the annual figure, they don't change from one month to the next.

I realise those who think an umbrella only has one contractor working for them will question why that would take more than a few minutes, but most umbrellas have a few contractors, all with their own special set of circumstances.

[eek]

And what Umbrella Company was that?

Clarity used to work that way - it’s very much a question of how and who handles processes. Larger umbrellas will have tasks set out so 1 set of people do payments, 1 do expense approval another do pension payments

[GreenLantern22]

In practice, there's no need for any delay to SalSac pension payments made by an umbrella company.

The reason I know this is simple; the umbrella company I used paid over the funds to my SIPP the same day that I was paid.

And what Umbrella Company was that?

[Protagoras]

In practice, there's no need for any delay to SalSac pension payments made by an umbrella company.

The reason I know this is simple; the umbrella company I used paid over the funds to my SIPP the same day that I was paid.

[GreenLantern22]

And besides this defines the "Prescribed time in which an employer must make payments to trustees or managers". It's a target to aim for, not a max speed to reach. It's maximum date they should make the payment by. On my previous permie job I was being paid on the 18th and the money reached the pension on 3rd of the following month, 15 after which is much more reasonable.

[GreenLantern22]

If you read the cited legislation, specifically 'regulations 16(2) and 21 of the Occupational Pension Schemes (Scheme Administration) Regulations 1996' in note 1. It's more clearly stated that both the 19th and 22nd refer to the following month:[/LIST]https://www.legislation.gov.uk/uksi/1996/1715

Ummm you are right. But makes no sense. Why would electronic payments be allowed to be done later?

[fulcon]

"Employee contributions are deducted from scheme members’ pay. Unless the scheme rules or regulations set out a shorter period, those contributions must be paid to the scheme by day 19 of the following month, or day 22 if paid electronically1."

This means that if they pay by cheque (highly unlikely but they could be doing it to keep the cash and earn interest) they are OK to pay 19th of the following month. But if they are paying electronically it should be day 22nd of the month they are deducted.

If you read the cited legislation, specifically 'regulations 16(2) and 21 of the Occupational Pension Schemes (Scheme Administration) Regulations 1996' in note 1. It's more clearly stated that both the 19th and 22nd refer to the following month:

• (a)where the contribution is paid to the trustees or managers of the scheme by means of electronic communication, on the 22nd day of the month following the last day of the relevant period; or
• (b)in any other case, on the 19th day of the month following the last day of the relevant period.

https://www.legislation.gov.uk/uksi/1996/1715

[GreenLantern22]

Currently with PayStream and also suffering from this issue for some months. I asked around and it seems this is breaching the Pensions Regulator rules:

https://www.thepensionsregulator.gov...-contributions

"Employee contributions are deducted from scheme members’ pay. Unless the scheme rules or regulations set out a shorter period, those contributions must be paid to the scheme by day 19 of the following month, or day 22 if paid electronically1."

This means that if they pay by cheque (highly unlikely but they could be doing it to keep the cash and earn interest) they are OK to pay 19th of the following month. But if they are paying electronically it should be day 22nd of the month they are deducted. I used to have salary sacrifice on my previous permie job and I always go my pension contributions on the 20th so this confirms that they were following the rules. Contact your pension provider and ask them how did your funds got paid. Then ask your umbrella company how they pay your funds, if they do it electronically it has to be done by the 22nd.

[Nazaire99]

I am currently with Brookson who overall have provided excellent service. However, I am swapping to Giant* specifically and only because of delays in salary sacrifice hitting my pension.

Brookson run a rolling 4 week payment period and, by law they have to pay the pension contributions I believe within 22 days from the end of this period. Because the payment period is not fixed to the end of the month, when I typically get paid, if they receive funds from my agency a day after the last period ends, I have to wait the 4 weeks of the new payment period plus the 22 days for the pension to hit my account.

As I've said the service I've received has been excellent, but this tax year I'm taking advantage of carry forward of unused contributions from previous years, so my pension payments are much larger than my net salary (which Brookson pay on receipt of funds). Due to vagaries of the payment cycle, since I increased my pension payments some pension payments have taken nearly 2 months from receipt of funds to hit my pension. Essentially I have up to 4 months credit exposure (I'm paid a month in arrears) to my agency and Brookson - so much for being a deemed employee because I don't take financial risk - its higher than when I worked Ltd!!

Another factor to take into account is that the pension company record the payments upon receipt, which given the large delay means that pension payments from monies earnt and paid as salary in one tax year will appear in the next one, which may have tax implications (e.g. loss of carry forward).

*I only have a choice of 3 umbrellas through my agent - Brookson, Giant and another who do not offer salary sacrifice. This is another problem, which I believe is a fundamental problem with the umbrella sector, which is essentially unregulated. Because there are so many cowboys firms out there and agencies have limited bandwidth, they can only vet a limited number of firms - hence the limited choice. As a further point I think it is fundamentally unjust being forced to work through companies that are not regulated.

[I am tired TIRED]

I get paid around 6th of each month and then Paystream credits pension amount on 19th of next month...so, it is almost 43 days on an average (Nov payroll on 06-Dec and pension credit on 19-Jan).. Seems like no motivation to remove inefficiency as they do get interest for this period anyway.

Parasol mirrors this - So November's Salary Sacrifice hits the SIPP provider around the 22nd of January

[eek]

I get paid around 6th of each month and then Paystream credits pension amount on 19th of next month...so, it is almost 43 days on an average (Nov payroll on 06-Dec and pension credit on 19-Jan).. Seems like no motivation to remove inefficiency as they do get interest for this period anyway.

That period also corresponds directly with how HMRC works PAYE periods run 6th -5th of a month with payments due on the 19th of that month.

so while I can see that it’s an incredibly long period operationally it makes sense

[patel]

I get paid around 6th of each month and then Paystream credits pension amount on 19th of next month...so, it is almost 43 days on an average (Nov payroll on 06-Dec and pension credit on 19-Jan).. Seems like no motivation to remove inefficiency as they do get interest for this period anyway.

[Heathmount]

I’ve been with Paystream for a few years. I get paid on the last working day of the month and then my pension contribution is in my SIPP (AJ Bell) on the 19th of the following month, possibly the 21st if the 19th is a weekend. Even accounting for pay day being a Friday I don’t think I’ve ever had to wait for more than 23 days for my contribution to hit my SIPP.

I’m not saying other Umbrellas don’t do it better (sounds like Clarity do), I’m just saying I’ve never had to wait 30 days for a payment.

[lucyclarityumbrella]

When dealing with so many individual SIPPs, it is understandable as it is very much a manual process for each contractor, it is also difficult when payments may not be 100% regular from the agency / client (ie on a specific day). On our side we do try and make payment to SIPPs within a few days of the contractor being paid, but as stated it is very much a manual process so not 100% full proof, unless there is a nudge from the contractor