We are always being told that we should be preparing for retirement. The Government, the media, wise older relatives with benefit of hindsight are all constantly extolling the virtues of sensible retirement planning and saving into a pension.
Despite this many of us are still not taking our retirement planning seriously. However since the Government changed the rules it has meant that most of us have been auto enrolled on a pension scheme and are at least making some sort of provision for the future.
We are often asked about pensions and the recent changes. Here are some answers to frequently asked questions.
As an umbrella contractor will I have a pension?
At Exchequer Solutions all our umbrella contractors are treated in exactly the same way as an employee in any other organisation. This means that all our umbrella employees are auto-enrolled on our pension scheme in line with Government legislation.
What is the scheme Exchequer are using?
Our pension provider is NEST (National Employment Savings Trust.) NEST was set up by the Government to make auto enrolment as simple as possible. Members can access all their account information online and can keep their NEST pension if they change employer or become self-employed.
Can I opt out?
Yes. We are legally obliged to auto-enrol any contractor earning more than £10,000 a year but individuals have the right to opt out during the one month opt out period. To opt out you must contact the pension provider directly.
In some cases people choose to opt out because they have alternative plans in place for their retirement, or they have other more immediate financial priorities. If you do opt out we recommend reviewing your situation regularly.
What is the best approach?
Investing in a pension is obviously something we recommend. It is never too soon to start saving and planning for your retirement. Everyone’s circumstances are different. If you aren’t sure then it might be the time to review your current situation and seek some advice.
How much do I have to pay?
At the moment a contribution of 3% is made by the employee and 2% made by the employer, meaning a total of 5% is paid. This percentage will increase in 2019 and you will be notified about the increase in line with Government.
More information on NEST and access to your pension account is available on their website.
I’m registered CIS so will I be auto-enrolled?
No, as a CIS contractor your tax and NI contributions are automatically deducted but the auto-enrolment rules don’t apply.
Should I take out a pension anyway?
We would always recommend planning for your retirement. We understand that people do this in different ways and there is no one size fits all approach. If you haven’t made any pension provision or think it is time to review your current pension arrangements then it is a good idea to seek professional advice from a reputable financial /pensions advisor.
As a self-employed individual you can opt to join the NEST pension scheme, this is straight forward way to ensure you are making pension contributions. This is a flexible scheme which you can contribute to as often as you want.
More information on NEST for self-employed individuals is available on their website.
If have any questions at all about contractor pensions there is more information on our website or give one of our team a call on 01244 500195.