Employers Pension - who pays?

[richie9648]

Ok first contracting gig and I opted into Nest. I also have a SIPP which I contribute into

Got my first payslip and seems that the employer pension has been deducted from my pay. I know I have to 'pay' employer NI and just wondered if its the same with pension element?

I am with Paystream btw

Thanks

[malvolio]

Who else do you think is going to pay it?

Serious question - there's more to being a contractor than claiming to be one...

[eek]

Ok first contracting gig and I opted into Nest. I also have a SIPP which I contribute into

Got my first payslip and seems that the employer pension has been deducted from my pay. I know I have to 'pay' employer NI and just wondered if its the same with pension element?

I am with Paystream btw

Thanks

The fee you agreed with the agency is the assignment fee from which all umbrella costs need to be covered.

That includes:-

1) your gross pay
2) Holiday pay
3) the umbrella's fee
4) Employer NI
5) Pension..

The fact you don't understand this tells me that it wasn't explained to you by Paystream in a way you understood but Paystream aren't doing anything wrong.

[richie9648]

I did suspect it - but isnt Paystream my employer and the pension notice clearly states that the Employer would contribute 3% and the govt 1% - this was email from Paystream

Going into your pension pot will be:-
Your contribution: you will pay 4.00% of your qualifying earnings
Our contribution: we will pay in an amount equal to 3.00% of your qualifying earnings
Tax relief: The government, in the form of tax relief, will pay an amount of 1.00% of your qualifying earnings
This means that if for example, you earn £300.00 a week, your qualifying earnings will be £180.00
Your contribution: You will pay in £7.20 a week
Our contribution: We will pay in £5.40 a week
Tax relief: The government in the form of tax relief on your payment will pay in £1.80 a week
In total, £14.40 will go into your pension pot.

Yeah not explained at all - stick to my SIPP I think

[malvolio]

I did suspect it - but isnt Paystream my employer and the pension notice clearly states that the Employer would contribute 3% and the govt 1% - this was email from Paystream

Going into your pension pot will be:-
Your contribution: you will pay 4.00% of your qualifying earnings
Our contribution: we will pay in an amount equal to 3.00% of your qualifying earnings
Tax relief: The government, in the form of tax relief, will pay an amount of 1.00% of your qualifying earnings
This means that if for example, you earn £300.00 a week, your qualifying earnings will be £180.00
Your contribution: You will pay in £7.20 a week
Our contribution: We will pay in £5.40 a week
Tax relief: The government in the form of tax relief on your payment will pay in £1.80 a week
In total, £14.40 will go into your pension pot.

Yeah not explained at all - stick to my SIPP I think

They do pay it, but the cash has to come from somewhere. Their margins per contractor are tiny, certainly not enough to pay your bills for you. So while they say they pay it, in reality that is labelling the various deductions to keep the accounting straight and HMRC happy.

Everything they pay you comes from the money passed to the umbrella by the agency less their margin*, who get theirs from the end client (plus or minus any other parties in the daisy chain).

You are not an employee in the sense you seem to understand it. You merely provide the labour that generates the money.




* And on that subject, what the agency gets is from their client as a result of their business dealings. You get the balance - so the margin is actually the bit you earn, not them - less all the various mandatory fees and taxes.

[northernladuk]

I did suspect it - but isnt Paystream my employer and the pension notice clearly states that the Employer would contribute 3% and the govt 1% - this was email from Paystream

It's essential you understand all the factors in your engagement. Yes you are 'employed' by the umbrella but it's not employment like being with a client. The umbrella is nothing more than a payment vehicle so will do the absolute minimum required. There will be none of the perks you'll get with an employer that values and rewards it's employees. It will be basic PAYE and shifting the money between the client and while taking something for their time.

Mal's point is an excellent one. Even via a brolly where you are an <cough> employee there is a lot to understand and manage. You aren't a valued looked after employee anymore

[richie9648]

It's essential you understand all the factors in your engagement. Yes you are 'employed' by the umbrella but it's not employment like being with a client. The umbrella is nothing more than a payment vehicle so will do the absolute minimum required. There will be none of the perks you'll get with an employer that values and rewards it's employees. It will be basic PAYE and shifting the money between the client and while taking something for their time.

Mal's point is an excellent one. Even via a brolly where you are an employee there is a lot to understand and manage. You aren't a valued looked after employee anymore

Thanks - yep get that completely given I have just come out of a 25 year relationship with one employer !!

On the pension front I will opt out and hoping I get a 'refund' on the employer pension contribution I made !!! But who knows eh

[richie9648]

I thought I would update on this and get some advice.

So I was enrolled into Nest - I paid into it for weeks (4&5). I paid both the employee and employer part of the pension. In total £180 (102 employee and 78 employer). I opted out in week 4 - refund come through on payslip today for only the £102. That cant be right can it ? Or is it just usual practice that the umbrella company keeps the employer pension element ?

[WTFH]

I thought I would update on this and get some advice.

So I was enrolled into Nest - I paid into it for weeks (4&5). I paid both the employee and employer part of the pension. In total £180 (102 employee and 78 employer). I opted out in week 4 - refund come through on payslip today for only the £102. That cant be right can it ? Or is it just usual practice that the umbrella company keeps the employer pension element ?

When you asked them (rather than us) what did they say?
There may also be a question as to whether you opted out within the first month - my reason for pointing this out is that you say you paid in for weeks 4 & 5 but opted out in week 4. Again, this is something you are best to discuss with the umbrella.

If you’re really convinced that your current umbrella is conning you (and based on the wording of your posts, that appears to be your mindset), then leave them and join someone like Clarity Umbrella https://clarityumbrella.co.uk , if you are able to do that - check your contract, and check with your agent.

[eek]

Well the employer contribution needs to have the following deductions taken from the money before it hits your bank account

Employer NI, apprenticeship levy, employee NI and income tax deducted

And the employee deduction needs employee NI and income tax deducted before it hits your bank account.

so although the figures seem identical the actual percentage you receive feels right.

the only way you could check is to get the payslip checked by another umbrella or Payslipbuddy.