Apart from the security of State pensions, individuals all across the UK tend to invest in personal pensions - an additional support system for their post-retirement life. Personal pensions are an interesting phenomenon in their own right. With continuous reforms in legislation, they have been known and understood in different formats historically. Currently speaking, they are instrumental in their dual function of saving for retirement and generous tax relief.
So, can one make personal pension contributions through an umbrella company? The answer is a staggering yes.
What we cover in this article:
Contractors working through an Umbrella company are classed as employees, which makes them automatically enrolled in the Workplace pension scheme, if they fulfill the following conditions -
Since an umbrella companies are legitimate employers, they are required to have a pension scheme in place for all their employees, which is to say that all employees are automatically enrolled in pension plans as soon as they join the company. These pension schemes can be of varied nature depending on the company's choice- funds, shares, etc. The contribution is made by both the company and the employee, which is automatically done at fixed intervals.
This auto-enrollment is mandatory at the time of employment as per the government guidelines, but if one chooses to opt out at a later stage, they can easily do so.
Also See: How To Choose An Umbrella Company?
In addition to the workplace pension scheme, you can also ask an Umbrella company to pay into your personal pension pot. When you make contributions through Umbrella, you have enough support in the form of allowances and earnings. You can consider these four relevant allowances when contributing to a pension -
It is important to take into account that the threshold income and adjusted income limits are different for previous tax years.
Saving and investment are crucial to a comfortable retirement and life afterwards. Numerous governmental reforms in the pension management is an indicator of the fact that financial security holds more value in an individual's life than anything else. In today’s time, where the economy takes precedence over every other aspect, finance is very tightly linked to the overall wellbeing of an individual.
Personal pensions in this regard are extremely helpful as they add on to the workplace pension and provide a much needed hike to the collected amount. With the current regulations, DNS umbrella companies are able to facilitate this process tremendously; they not only contribute to the pension pots of their employees but also take up the outsourced complicated work of managing the pensions efficiently.
Also See: Expense Claim Through Umbrella