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How do umbrella company pension contributions work?

Updated: Sep 20, 2023

Contractor pension contributions are a major concern for self-employed individuals when it comes to retirement planning. For freelancers working without the help of an umbrella company, making pension contributions can play second fiddle to saving for the annual tax bill.

Umbrella companies can help by offering solutions that simplify making tax payments while also growing contractor pensions both through the individual's savings and through the umbrella company pension contributions.

What are your pension options as a contractor?

As a contractor, your pension options depend on your company structure:

  • Personal savings for those registered as self-employed

  • Contributions made through your own company's income

  • Umbrella company pension contributions

If you're planning ahead for your retirement, it's important to take umbrella company pensions into account when calculating the full value of working under an umbrella company.

Do you get a pension with an umbrella company?

Since the introduction of auto-enrolment workplace pensions, employers are required to offer a workplace pension scheme. When you work under an umbrella company, you are legally an employee. Therefore, reputable umbrella companies should offer a pension scheme.

Umbrella pensions should include both your employee contribution and the employer's contribution, helping you to save more towards your retirement overall. There may be different rules if you work via a Personal Service Company or other structure - ask or check your Key Information Document if you're not sure.

How do umbrella company pension contributions work?

When paying into a pension umbrella company T&Cs can differ slightly, but in general the umbrella company will deduct your employee contribution from your gross income along with any other legally required deductions, such as PAYE income tax, National Insurance and student loan repayments.

Employer pension contributions will be deducted from the intermediary or umbrella company income as outlined in the Key Information Document for your particular service or structure. This is also the case if you are classed as a PAYE Temporary Worker, allowing you to build your pension savings even when carrying out temporary work.

How much are umbrella company pension contributions?

The amount you pay into your pension and the contribution made by the umbrella company will depend on your income.

As an example:

  • Umbrella company employee earning £1,000 per week

  • Employee pension contribution of around £30

  • Umbrella company pension contribution of about £22

After all the legally required deductions, you could expect a take-home income of over £750 with over £100 in holiday pay, plus over £50 per week added to your pension savings for retirement.

What pension options does Primis offer?

You can find details of pension contributions in the Key Information Documents for our services. Generally speaking, if you choose a service by which you work as an employee rather than as a self-employed individual, you will be entitled to employer pension contributions.

If you are an existing Primis customer and you're not sure if you are receiving pension contributions, please contact us and we'll be happy to clarify your T&Cs. New customers are equally welcome to make any enquiries, and we can help you to choose between our Umbrella, PAYE, Deemed Tax, Ltd Company (PSC) and CIS structures.

You can also visit our contractor hub for more guidance and resources.


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