What is the value of pension in a FTC of 6 - 12 months?

[rocktronAMP]

Here is a quick question:

For those of you who were Limited Contractor until 2019, and have taken up Fixed Term Contracts 6 months to 12 months. Is it worth opting in the pension scheme?

As a (re-)employee under PAYE, you should know that you are auto-enrolled into the working practice pension initiative. However, you can opt-out if the earn over £119 and less than £512 per month (which of course the majority here will do).

My gut is telling that IR35 will not be repealed by April 2021. So probably by the end of the year, I may as well search for permanent gig. But who ruddy knows this side of COVID-19. So maybe, the right the decision is to suck it up, but before I do, I would love to hear what other contractors (we call us ourselves that now) in a similar position to me are doing with FTC and autoenrolled pensions?

[northernladuk]

Changed my answer after thinking about it.

I'd be looking in to how good the pension offering is. Secondly I'd working out what I've got in the company and how much I need etc. I'd also be making a call on whether this is a one off or I'm going to be there for years.

From there you can make a better informed decision. It might be worth you putting as much as possible in to their fund to reduce your tax liability and use the company money to top up your income to match whatever you need. If it's a crap scheme, you see this as a one off and plenty of cash in the company I'd forget the scheme because to the hassle and just continue to pay it out of company etc.

Answer will depend on the exact situation I think.

[malvolio]

Prpbably not much, tbh. They will likely put in 1-2% of gross, which you will need to match up to about 5%. And if you opt out their 1-2% gets added to your gross salary.

But it depends on the specific scheme, and whether or not you see FTCs as a longer term objective (I wouldn't, but hey...). You may be better off opting out of it and ading to your existing pot out of gross and reclaiming the tax at year end.

[rocktronAMP]

Changed my answer after thinking about it.

I'd be looking in to how good the pension offering is. Secondly I'd working out what I've got in the company and how much I need etc. I'd also be making a call on whether this is a one off or I'm going to be there for years.

From there you can make a better informed decision. It might be worth you putting as much as possible in to their fund to reduce your tax liability and use the company money to top up your income to match whatever you need. If it's a crap scheme, you see this as a one off and plenty of cash in the company I'd forget the scheme because to the hassle and just continue to pay it out of company etc.

Answer will depend on the exact situation I think.

I am now dithering on this, because I looked at the details. It is 5% employee / 3% company contribution. I'm sliding to wanting that 5% monthly salary in my pocket, because I probably will move to permanent in 2021 with my crystal ball of IR35 being immovable. You are right, I could earn a higher salary in the next job / gig.

Also I didn't bother with organising LTD company pension scheme so that bit is moot. I don't loads of wonga in my remaining LTD PSC anymore. It is an dormant state, then, until to next year.

[rocktronAMP]

I am now dithering on this, because I looked at the details. It is 5% employee / 3% company contribution. I'm sliding to wanting that 5% monthly salary in my pocket, because I probably will move to permanent in 2021 with my crystal ball of IR35 being immovable. You are right, I could earn a higher salary in the next job / gig.

Also I didn't bother with organising LTD company pension scheme so that bit is moot. I don't loads of wonga in my remaining LTD PSC anymore. It is an dormant state, then, until to next year.

Ok I have new information. The pension scheme is known a Master Trust List of authorised master trusts | The Pensions Regulator

What will swing it to staying with auto enrolement (autoenrolement.co.uk) and not opting out is whether a UK Limited company contractor (director) can contribute to a Master Trust and pay pension contribution through the company account instead of a personal account. Can you contribute to MTs using a business account?

I am thinking of the future , if IR35 to private sector is repealed or suspended, and we do go back to pre-2020 contracting, then could contribute to a master trust as an employer? And obviously, as a director with no employees then that is all, there would be no employee contributions. Would NI contributions also be required in that situation?

[Peoplesoft bloke]

Partially depends on how close to 55 (57 soon) years old you are.

Personally having passed both of those milestones but not yet taking any pension, I'd join the scheme.

Once you hit the above age you can cash it in - and before that you can transfer it to consolidate or if you have a scheme you prefer.

It's free money from the employer (their contribution) and tax efficient for your contribution.

Unless you are really really short of cash it would be a no-brainer for me to join the pension.

[Peoplesoft bloke]

What will swing it to staying with auto enrolement (autoenrolement.co.uk) and not opting out is whether a UK Limited company contractor (director) can contribute to a Master Trust and pay pension contribution through the company account instead of a personal account. Can you contribute to MTs using a business account?

I am not a pension adviser or a lawyer but I am 99% sure that even if you couldn't contribute as a director later on, you could get the pension cash out and put it into a suitable scheme either personally or within yourco.

[rocktronAMP]

I am not a pension adviser or a lawyer but I am 99% sure that even if you couldn't contribute as a director later on, you could get the pension cash out and put it into a suitable scheme either personally or within yourco.

Thanks for the replies and your perspective. I am also in the "second phase" on my life and slightly younger than you.
I sent an enquiry to the pension provider to see what they say.

[Paralytic]

Thanks for the replies and your perspective. I am also in the "second phase" on my life and slightly younger than you.

Reincarnated?