A Contractor’s Guide
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 and has now rolled out to all employers.
This process was to ensure that all employees should have access to a workplace pension scheme. This applies to all employees over 22 years of age and earning over £10,000 a year.
At the moment, the combined minimum is 5% of your qualifying earnings.
Anyone under the age of 75 and living in the UK can and should contribute to a pension. As the state pension will be worth only £110.15 per week, it’s advisable to make additional provision, and a workplace pension may provide the ideal opportunity to do so.
How does this affect contractors working through agencies?
If you work for a recruitment agency the rules still apply. The company that pays you, be it an umbrella or the agency themselves, are required to offer a workplace pension. If you work for more than one agency, each one of them may be required to enrol you, so you could end up contributing to several different pension schemes which is not an ideal situation for many contractors.
If you’re employed by an umbrella company
If you work for an umbrella company such as Payments Pro Umbrella this issue will be negated: you’ll be employed by the umbrella company, not the agency. This means you can work on assignments supplied through different agencies and still only have one employer. The responsibility of offering a workplace pension falls on the umbrella company, so you’ll only have one pension pot. This is one of several ways that working through an umbrella company can simplify a contractor’s finances and make them more efficient.
If you already have a pension
If you already have a scheme that you are happy with you are free to stick with it. However, your employer has a legal obligation to enrol all qualifying employees, so once you meet the criteria they will have to enrol you. Once you have been enrolled you will then have the option to opt out. If done within 30 days you will receive a refund of your first month contributions on month three. In every case you should always make sure you read all the information your employer, or the pension provider, sends you.
To find out more about the Payments Pro pension scheme please click here.