Salary sacrifice is a great way to boost your personal pension pot by increasing the amount you contribute each time you are paid. If you’re a contractor, freelancer or agency worker and you require the services of an umbrella company, some can accommodate salary sacrifice – if it’s something you’re interested in. Continue reading to find out more about salary sacrifice.
How does Salary Sacrifice work (pensions)?
Salary sacrifice is an arrangement where you agree to give up part of your salary to increase the payments made into your pension pot. Reducing your salary in this way will reduce the amount of tax and National Insurance Contributions (NICs) due on your income. And, contributions to your pension are also not subject to tax and NICs, making it a very tax-efficient way to save for retirement.
Is Salary Sacrifice a beneficial option for me?
If any of the following criteria apply to you, salary sacrifice may be a beneficial option to increase your pension savings:
- You are a high earner
- You want to retire soon
- You have disposable income
- Growing your pension pot is a priority
- You have additional sources of income
- You are not concerned about a reduction in your weekly or monthly salary (as you’ll be allocating more towards your pension)
How much salary should I sacrifice?
You can choose whether to sacrifice a percentage or a fixed amount of your pre-tax earnings. However, the amount you sacrifice cannot mean your salary falls below the minimum wage. You should also take great care when considering the amount, as it affects your current and future finances. For example, if you are considering buying a property, a lower salary can reduce your mortgage options. It is essential to consider that the amount you sacrifice will affect any earnings-related benefits, such as paternity/maternity pay since it’s calculated on your earnings.
Do I have to have an existing pension in place?
If you have an existing pension you would like to make contributions into – great! We will ask you some questions about your pension scheme to ensure your contributions can be sent to the provider when we pay you. But don’t worry, if you don’t have a pension in place, we have teamed up with expert Financial Advisors who can assist you. They are on hand to offer all Umbrella company UK employees a no-obligation financial consultation – at no cost.
Speak to an expert Financial Adviser
Umbrella Company UK has teamed up with expert Financial Advisers who can help you make an informed decision about your pension, how much you should sacrifice and can help you set up a personal pension plan. If you would like to be contacted by a specialist Financial Adviser, please complete the short form on our website, and we’ll arrange a free consultation.
Did you know that Umbrella Company UK offers a Salary Sacrifice service?
Umbrella Company UK is delighted to offer our umbrella employees the opportunity to benefit from our pension salary sacrifice service. For more information about our service or to request a tailored umbrella company take home pay calculation, please give us a call on 01707 669023, or complete the short form here.