Salary sacrifice time delay

[LouiSapphireContracting]

Hi all. New poster here!

I’ll throw in my two-pence from an umbrella’s perspective — and I’m here to learn as much as to offer a view.

Most umbrellas work on a monthly cycle for pensions and the reasons are fairly unglamorous. The issue is the practical admin burden. Given how transient contracting is, we can’t operate a simple direct-debit model with pension providers, so each pension payment is effectively handled on a bespoke basis. Remitting pensions weekly means additional processing and reconciliation.

Weekly pension payments are possible, but at scale it usually means either higher admin charges or fewer pension options to make it workable.

Genuine question for those paid weekly: would weekly pension payments be preferable if it meant paying a bit more or fewer options, or is monthly in arrears acceptable if it’s accurate and transparent?

[Juninho1976]

How does it work in terms of which tax year teh contributions apply to? I assume if for example a payment was made after April 5th it goes into the next tax year right?

On a side note- does anyone use parasol? I want to double check as they said on the phone they won't charge any admin fee for paying into my sipp (I have that with a platform) and can support all SIPPS except vanguard?

[LouiSapphireContracting]

How does it work in terms of which tax year teh contributions apply to? I assume if for example a payment was made after April 5th it goes into the next tax year right?

On a side note- does anyone use parasol? I want to double check as they said on the phone they won't charge any admin fee for paying into my sipp (I have that with a platform) and can support all SIPPS except vanguard?

Yes – there are effectively two separate timings to be aware of.

From a tax point of view, with salary sacrifice you get the tax and NI saving in the pay period the salary is reduced (i.e. you pay tax on a smaller gross amount as your earnings have reduced).
But from a pension perspective, the contribution counts towards the tax year in which the pension scheme actually receives the money.


On Parasol - worth just checking the fine print on that.

I’m not sure exactly what they’re doing right now, but until fairly recently their 'selling point' was that they’d only top up salary sacrifice pensions by ~11.5%. Most umbrellas pass through the full employer NIC saving (15% now) and then charge a small, visible admin fee (often £5–£10).

So while Parasol may not show a separate 'admin fee', the cost is (or certainly was) taken by retaining part of the NIC saving instead. From memory that was up to £100 per week.

In other words: 'no fee' doesn’t necessarily mean 'no cost'. Always compare theactual pension contribution and net take-home, not just whether there’s a line item called a fee.

https://parasolgroup.co.uk/blog/2024...bove-the-rest/

[Juninho1976]

Yes – there are effectively two separate timings to be aware of.

From a tax point of view, with salary sacrifice you get the tax and NI saving in the pay period the salary is reduced (i.e. you pay tax on a smaller gross amount as your earnings have reduced).
But from a pension perspective, the contribution counts towards the tax year in which the pension scheme actually receives the money.


On Parasol - worth just checking the fine print on that.

I’m not sure exactly what they’re doing right now, but until fairly recently their 'selling point' was that they’d only top up salary sacrifice pensions by ~11.5%. Most umbrellas pass through the full employer NIC saving (15% now) and then charge a small, visible admin fee (often £5–£10).

So while Parasol may not show a separate 'admin fee', the cost is (or certainly was) taken by retaining part of the NIC saving instead. From memory that was up to £100 per week.

In other words: 'no fee' doesn’t necessarily mean 'no cost'. Always compare theactual pension contribution and net take-home, not just whether there’s a line item called a fee.

https://parasolgroup.co.uk/blog/2024...bove-the-rest/

Thanks !!

I only just clocked that when they sent the illustration... they effectively take 3.5% but in the notes it said that was capped at £100 (which I then thought was similar to the admin fees but looks like the cap is per month or maybe per week but either way a lot).

Does anyone on here have experience of which providers do a small fee but pass on ALL the NI savings (I am hoping to put quite a lot into my pension next year!) - I am limited to a short 'PSL' list.

some of the companies on the short list I have heard of (and some I have used!):
parasol
giant
paystream

and others I have not like azebra, compass contracting, nasagroup, clipper, umbrella, sterling group and a few others.

Of the above I think nasagroup will pass on the full savings and charge £5 per week^ and seem to get ok reviews?

[eek]

Thanks !!

I only just clocked that when they sent the illustration... they effectively take 3.5% but in the notes it said that was capped at £100 (which I then thought was similar to the admin fees but looks like the cap is per month or maybe per week but either way a lot).

Does anyone on here have experience of which providers do a small fee but pass on ALL the NI savings (I am hoping to put quite a lot into my pension next year!) - I am limited to a short 'PSL' list.

some of the companies on the short list I have heard of (and some I have used!):
parasol
giant
paystream

and others I have not like azebra, compass contracting, nasagroup, clipper, umbrella, sterling group and a few others.

Of the above I think nasagroup will pass on the full savings and charge £5 per week^ and seem to get ok reviews?

Literally everyone apart from parasol will charge a small fee for processing salary sacrifice pensions...

[Protagoras]

The only benefit of using an umbrella company is that one can reduce NI liability (by reducing salary) and pass the financial benefit of doing so to pension.
The notion that this might not be passed in full to pension is ridiculous - it's the worker's fee income.

Fair enough, I think, making an admin charge to pass funds to a SIPP. That said, a while back when I was an umbrella worker, no admin fee was charged but probs things have changed since then.

[eek]

The only benefit of using an umbrella company is that one can reduce NI liability (by reducing salary) and pass the financial benefit of doing so to pension.
The notion that this might not be passed in full to pension is ridiculous - it's the worker's fee income.

Fair enough, I think, making an admin charge to pass funds to a SIPP. That said, a while back when I was an umbrella worker, no admin fee was charged but probs things have changed since then.

Not quite, technically it's the umbrella's money that you earnt for the umbrella.

The correct thing would be that every penny is paid to you but some umbrellas are owned by private equity who have large debts that need to be paid because they overpaid for the umbrella in the first place.

[Protagoras]

Not quite, technically it's the umbrella's money that you earnt for the umbrella.

Legally, yes. Morally, I think it's the worker's money.

[Dorkeaux]

Literally everyone apart from parasol will charge a small fee for processing salary sacrifice pensions...

I've used Giant in the past.
Their fee for processing salsac payments into my SIPP was not a small fee..
They make you join their "Premium" package, an expensive bunch of tulip "benefits" that you'll never use.
It's the only route to having payments made to your SIPP, and they take a month or two to make that happen. Every time.

So I'm following this thread with great interest.

[Juninho1976]

I've used Giant in the past.
Their fee for processing salsac payments into my SIPP was not a small fee..
They make you join their "Premium" package, an expensive bunch of tulip "benefits" that you'll never use.
It's the only route to having payments made to your SIPP, and they take a month or two to make that happen. Every time.

So I'm following this thread with great interest.

I'm going to go with nasa group and I can tell you in a few months how good they are. They're a lot more transparent to me than others so far. I am ok with the small fee of £5 per week for the SIPP processing (taken pre any other deductions so net cost is like half of that).

They were super helpful with lots of illustrations too to help me work it all out.