What are Paystream talking about here with this 'free' 12.5% for SIPP contribs?

[lucyclarityumbrella]

When I sacrifice some of my rate into my pension I calculate it by deducting it from my full day rate. But the umbrella companies seem to make out they’re doing you a favour by returning the employer NIC to you.

TBF it's not all brollies, we do exactly as you state taking the pension from the day rate and thus reducing all tax and NI , no favours per-se it is your benefit and you see that through our payroll.

[BobbyD]

As you all know there is no favour being passed on, there are two things, the ERS Saving is either being passed to the pension OR is reducing your ERS NI on the payroll and effectively being paid out to you as part of the salary - so depends on how the umbrella is approaching it - and IF they are passing this saving on to you.

Exactly, so why do umbrellas constantly make out that they’re being extra kind by “passing the saving on to you”… That Parasol can even keep a portion of this is and STILL make out they’re doing you a favour by ‘giving you an extra 10%’ is disgusting, but I’d go as for as to call it legalised theft.

it makes me so angry that they make out that somehow, it is actually them paying the Employers NI. Either they believe this or they’re treating us like utter idiots.

[lucyclarityumbrella]

As you all know there is no favour being passed on, there are two things, the ERS Saving is either being passed to the pension OR is reducing your ERS NI on the payroll and effectively being paid out to you as part of the salary - so depends on how the umbrella is approaching it - and IF they are passing this saving on to you.

[BobbyD]

I’ve just had the exact same conversation with paystream and I think the confusion arises because of the ludicrous situation we have with Umbrella companies.

Technically, they’re my employer. But we all know this is a joke. They’re NOT an employer at all (if my contract comes to an end are they going to continue to pay me minimum wage??). They’re simply a mechanism for paying tax.

When I sacrifice some of my rate into my pension I calculate it by deducting it from my full day rate. But the umbrella companies seem to make out they’re doing you a favour by returning the employer NIC to you.

legally of course, they could retain ALL of the employer nic savings. Which just proves what an absolute joke this whole situation is.

[sreed]

By paying into a SIPP, using salary sacrifice, you effectively reduce your PAYE pay and that reduces how much *Employers* National Insurance is paid. Because this just goes to the Gov usually, Paystream are saying they'll give you the saved NI.

You'll also pay less Employee NI, reflected in increasing your take home, which means the £1000 doesn't come close to costing you £1000 from your take home.

To be fair, I think the flat fee is the fairest way of doing it. My Umbrella takes some cut from the NI and it's hard to work out actually how much they're raking in from it

Parasol take 3.5% so pay 10.3% (with a limit of £100 maximum per month)

https://parasolgroup.co.uk/parasol-a...bove-the-rest/

https://www.reddit.com/r/ContractorU...contributions/

Good to know, thanks. Paystream was £6/weekly-payslip flat-fee so I guess even with a 30% hike that's good value if you're sacrificing a decent amount. They've probably realised that hence the increase.

[I am tired TIRED]

Parasol take 3.5% so pay 10.3% (with a limit of £100 maximum per month)

https://parasolgroup.co.uk/parasol-a...bove-the-rest/

https://www.reddit.com/r/ContractorU...contributions/

[sreed]

To be fair, I think the flat fee is the fairest way of doing it. My Umbrella takes some cut from the NI and it's hard to work out actually how much they're raking in from it

I wouldn’t be making that assumption nowadays - I can think of one umbrella that is pocketing some of the Employer NI savings and not putting it all in the pension fund.

Wtf, I didn't even realise that this is something to look out for! I've only ever used Paystream with SS.

Which umbrellas are these and what's the size of the cut they're taking?

[lucyclarityumbrella]

And that's when it becomes complicated to see it on the pay summary! So maybe thats a pointer to finding one who can show it in a straight forward manner - just saying

[eek]

Just a complicated way of saying things. The amount of pension you request is what goes to your pension and the savings are shown on the pay summary which is effectively a reduction in all tax and NI.

I wouldn’t be making that assumption nowadays - I can think of one umbrella that is pocketing some of the Employer NI savings and not putting it all in the pension fund.

[lucyclarityumbrella]

Just a complicated way of saying things. The amount of pension you request is what goes to your pension and the savings are shown on the pay summary which is effectively a reduction in all tax and NI.

[amanwhoisquiet]

Right.. so it'll just be on payslips as an invisible-ish reduction in Emp NI then I suppose. Thanks for the answer.

[vwdan]

By paying into a SIPP, using salary sacrifice, you effectively reduce your PAYE pay and that reduces how much *Employers* National Insurance is paid. Because this just goes to the Gov usually, Paystream are saying they'll give you the saved NI.

You'll also pay less Employee NI, reflected in increasing your take home, which means the £1000 doesn't come close to costing you £1000 from your take home.

To be fair, I think the flat fee is the fairest way of doing it. My Umbrella takes some cut from the NI and it's hard to work out actually how much they're raking in from it

[amanwhoisquiet]

Just got an email from PayStream and they're raising the fee they charge to maintain a standing order into my SIPP by 30% (thanks).

As well as that, they also mention this:

"To ensure you receive the maximum benefit of salary sacrifice, PayStream will continue to pass down 100% of the employer savings (14.3%) to you. This means for every £1000 you sacrifice; alongside your tax and employee NI savings, PayStream will pass down an additional £125 to your gross pay."

I don't know what this is and I don't think I ever get more landing in my SIPP than I explicitly ask to be moved.

Am I just being dazzled by some figures to try and get me to ignore the fee hike?