Umbrella work place pension

**wattaj** · 25 February 2020, 09:56

Originally posted by bubble99 View Post

On first reading, it sounds great since it says they will put in 4%. But is that 4% just coming out of my daily rate anyway?
I mean where do they get that 4% from? I asked them and they said it doesnt come out of my rate, but I don't believe them (assume I jsut spoke to someone not that informed)? Is thier contribution effectively just coming out of my daily rate or are they clawing it back from the agency/end client somehow?

Yes, it comes out of the money charged to the client. In many cases this will be what you regard as your "daily rate" (i.e. the gross amount). This is different from the "deemed direct payment" which is the actual money that you will get into your hand net of any employment taxes and withheld amounts (i.e. holiday pay).

Read the guides Old Boy. Read the guides.

**northernladuk** · 25 February 2020, 10:21

Why not ring them an ask them. They are going to be your employer so have an obligation to be straight with you.

This might help.

How Umbrella Company Workers Can Save for Retirement

**bubble99** · 25 February 2020, 10:41

I did ring them - i asked explicitly if it came out of my rate and they said it didnt... but the chap didnt give me a great deal of confidence. I just assumed im in quite a generic situation so thats why I came here - based on what wattaj mentions it sounds like it effectively comes out of my daily rate i.e. the reality is both the employer and employees contribution is coming out of my daily rate (which doent suprise me since the employers NI is too...).

**northernladuk** · 25 February 2020, 10:46

How are you selecting your brolly? From a list or are you allowed to pick your own?

**GhostofTarbera** · 25 February 2020, 10:51

Originally posted by bubble99 View Post

I did ring them - i asked explicitly if it came out of my rate and they said it didnt... but the chap didnt give me a great deal of confidence. I just assumed im in quite a generic situation so thats why I came here - based on what wattaj mentions it sounds like it effectively comes out of my daily rate i.e. the reality is both the employer and employees contribution is coming out of my daily rate (which doent suprise me since the employers NI is too...).

They can only pay out of your rate

unless they have a magic money tree - ignore numpty person you spoke to

Sent from my iPhone using Contractor UK Forum

**ladymuck** · 25 February 2020, 10:55

The best way to be sure is to ask for a detailed illustration based on the rate agreed with the client/agency and see what deductions they take and what you actually end up receiving. You want every deduction listed out and be told if it's a pre or post-tax deduction.

**bubble99** · 25 February 2020, 11:09

Originally posted by GhostofTarbera View Post

They can only pay out of your rate

unless they have a magic money tree - ignore numpty person you spoke to

Sent from my iPhone using Contractor UK Forum

yup figured ;-)

thanks guys

**wattaj** · 25 February 2020, 12:19

Originally posted by bubble99 View Post

...the reality is both the employer and employees contribution is coming out of my daily rate (which doent suprise me since the employers NI is too...).

It should not surprise you. This is what many clients/agents will be trying on for the next few years. It's disappointing, but there won't be too many clients that will up rates to cover the employer taxes whilst there is a glut on contractors oin the market who will take the hit for them.

Market forces, 'init?

**BABABlackSheep** · 25 February 2020, 16:34

Go with an umbrella that gives you gross salary sacrifice and start your own SIPP.

The umbrellas will say you put in 4% and they put in e.g. 3%. This is out of your gross pay. No point if you have a SIPP.

Word of warning. Certain umbrellas will only let you make a pension amount per month ajudtment once per tax year. So check with them. They also charge you £4 per transfer net for doing this.

Umbrella work place pension