What Happens To My Pension When I Switch To Umbrella?

What Happens To My Pension When I Switch To Umbrella?

Jan 07, 2021

Umbrella pensions

Personal pension contributions offer a tax-efficient way of saving for the future. The contributions made to a pension scheme are tax-free and as the value of the pension fund grows, also free of tax. At Crest Plus we are not financial advisors and so cannot advise on the level of pension contributions employees should make in any year; we can only act on an employee’s instructions, whether those instructions are tax-efficient or not.

As an employee of a compliant Umbrella company like Crest Plus you will be entitled to access to our pension scheme.

If you meet certain criteria set out by the pension legislation you will have to be auto-enrolled into the company scheme, however, you also have the right to opt-out if you do not wish to contribute at all or if you would prefer to pay into your own personal pension.

As your employer, an Umbrella company will contribute 3% of qualifying earnings and you as the employee will pay 5% of qualifying earnings into the auto-enrolled pension bringing overall tax-efficient contributions to your pension scheme of 8%. If you are a high rate taxpayer, you can receive tax relief on contributions up to a value of £40,000 each year under the current annual allowance rules (2019/20).

If you have been a limited company (PSC) contractor who has been making contributions to a private pension scheme, as an employee of Crest Plus you will be able to decide between the following options:

  • Opt into the Umbrella auto-enrolled pension scheme and maintain your personal pension.
  • Opt-out of the Umbrella auto-enrolled pension scheme and maintain your personal pension.
  • Opt into the Umbrella scheme and discontinue contributions to your personal pension.

If you wish to continue to make contributions to a private pension or SIPP (Self Invested Personal Pension) whilst working as an Umbrella employee we always suggest you take advice from your pensions advisors on the most tax-efficient approach as we are your employer, not your financial advisors.

However, at Crest Plus we are pleased to say that unlike many in our sector we are able to process your SIPP or personal pension payments via your PAYE pay as an employee of our Umbrella company.


Important notes

  1. We do advise that all employees must make sure there is nothing which prevents them substituting pension for pay via a salary sacrifice arrangement within their nominated pension scheme provider.#
  2. We can pay to any pension provider that the contractor chooses as long as they accept bank transfers.
  3. There will be no charges from Crest Plus to the employee for administering their pension payments.

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