Pensions – planning for your future

Noone wants to think about getting older but pensions planning for the future is vital for making sure you’re in a good position when you’re ready to retire. We all want a retirement we can enjoy without financial worries.

One of the benefits of working through an umbrella company is access to workplace pensions. A workplace pension means you’ll contribute to your pension each month and so will your employer. You’ll also benefit from tax relief on these contributions.

As a contractor, you can work on many assignments through many different agencies. This can be tricky with you ending up with a number of different pensions pots. But working through an umbrella company means you’ll only have one employer, and therefore, you’ll only have one pension pot. This is one of several ways that working through an umbrella company can simplify your finances and make them more efficient and transparent.

Pensions can seem really confusing so we’ve covered some of the basics here.

Do you have to join?

In 2012 the UK Government introduced new legislation making it compulsory for employers to provide a workplace pension for their employees. The process started with the country’s largest employers in October 2012 and continued until 2018, when all UK employers were included.

The aim is that all employees should have access to a workplace pension scheme, and this means that we must automatically enrol all employees into a pension scheme.

As a Husp employee you’ll be automatically enrolled into a pension scheme, if you’re:

  • aged between 22 and State Pension Age;
  • earning over £10,000 a year (£833 a month/£192 a week) ;
  • working, or ordinarily working, in the UK;
How much will you have to save?

You have to save a minimum of 8% of your qualifying earnings into your pension pot each month. This includes three elements:

  • The employer contribution which is covered by the employment costs the umbrella company pay on your behalf (3%)
  • your personal contribution (4%)
  • tax relief (1%)
Can you opt out?

Whilst workplace pensions are one of the benefits of working through an umbrella company, it’s possible that the scheme your umbrella company is offering isn’t right for you. If this is the case, you should feel free to make your own arrangements. Your employer has a legal obligation to enrol all qualifying employees, so once you meet the criteria, they will have to enrol you, but you can opt out within 30 days of enrolment.

If you do opt out it’s really important you make sure you have an alternative pension plan in place. The earlier you start saving, the more time you have to build up a good income for your later years.