UK Contractor Pension Planning

Lending A Helping Hand: Learning About Pensions Can Be A Real Bonus For Contractors

5 March 2015

A glance around the UK’s media landscape reveals certain themes to the column inches and news clips we consume. In particular, the subject of pensions takes up a daily residency in our economic news diet.

For contractors, however, pensions are less of a news item and more of an elephant in the room issue. To find out why contractors could do more about pensions, we spoke with Umbrella’s Operations Director, Neil Armitage:

“More and more people are choosing contracting as a career path in the 21st century. That puts more onus on personal responsibilities for things like pension pots, and thinking about the future. Even young contractors need to put their mature heads on and start investing in schemes.”

“Really, younger contractors shouldn’t get too caught up with the idea that pension prep is for the older generation. By age 55, people can start drawing down on the their pensions. So this great early access helps contractors with families help their kids into university, invest in property or put money into stocks and shares.”

“Additionally, pensions enable contractors to make great savings on tax. Contractors can invest money directly from company-held bank accounts, saving on income tax and subsequently grow those funds in a tax-free environment. Contractors are able to invest up to £40,000 each year this way, and over £1million in a lifetime.”

“Obviously there are key choices to make as regards a provider. Because of the occasionally topsy-turvy nature of contracting work, finding a flexible pension is paramount. There has to be an ability for the contractor to calibrate their pension payments on a monthly basis.”

“There is also the issue of finding a reliable, market-proven provider that will stay the course! Checking the performance of a potential provider is easy enough, and these thorough background reviews should be part of any investigation into setting up a pension.”