FLEXIBLE UMBRELLA SOLUTIONS FOR WORKERS WHO WANT TO ENJOY THE BENEFITS OF CONTRACTING, FULL EMPLOYMENT RIGHTS AND MORE.
Umbrella Group Pensions
Umbrella Pension Scheme
Ensuring you and not the taxman benefit from your Contract
- Funded via employer contributions from your contract
- Uniquely avoids Employers and Employees national insurance as well as income tax
- Benefit from 39% or 49% overall tax breaks
- No initial set-up fees so all of your money is invested
- Penalty free payment holidays
- Move the pension to a new employer if you change jobs or continue to invest personally
The Umbrella group personal pension scheme offers you a very tax efficient investment opportunity because payments are made directly from your payroll. This contribution is exempt from the income tax and National Insurance deductions that would apply if you took this money directly as payroll and you could therefore benefit from the equivalent of 39% or 49% tax relief depending on your tax rate.
A Flexible Approach
The Umbrella group personal pension scheme offers complete flexibility so you can take penalty free payment holidays when it suits you. It also offers low admin charges and a wide range of funds to help ensure that your investment reaches its full potential.
The independent advisers at ContractorFinancials can help you to take advantage of the more relaxed pension rules that came into force in April 2006, maximising your investment potential and reducing your tax bill as a result.
If you choose to leave Umbrella at any time then you can stop the pension or transfer your plan to your new employer. Alternatively, you can continue funding as a personal investment.
Using Salary Sacrifice to minimise your tax-bill
Investing via a salary sacrifice agreement is one of the most tax efficient investment options that are available to you. The scheme involves you taking as little as the minimum wage and covering your fees whilst all of your other income can be invested into a pension. Whilst this level of investment may not be sustainable over a long period of time, it can represent a significant boost to your eventual retirement fund whilst saving you tax and NI contributions on your income.
You can also invest personally in the pension up to 100% of your remaining salary although this income will be subject to NI deductions.
The information provided above is factual and does not consider your personal circumstances. We advise you to read the information provided and decide whether or not the plan appeals to you as we are not advising that the plan is suitable for you.
Umbrella has instructed ContractorFinancials to set up and administer the plan. As Independent Financial Advisors they will be able to answer your questions and give advice as to the suitability of the scheme. If you are unsure as to whether the Umbrella scheme is right for you then you should seek expert advice from them.
If you consider joining the scheme then ContractorFinancials will provide you with a personal illustration and a document outlining the key facts of the contract to give you a better understanding of the benefits of the plan.
ContractorFinancials are Independent Financial Advisors specialising in offering tailored financial solutions to contractors and freelancers. ContractorFinancials is a trading name of ContractorFinancials Ltd. which is regulated and authorised by the Financial Services Authority.
Call 0845 062 8888 or email email@example.com
The value of investments may rise as well as fall and past performance is not a guide to future returns.
Are there any charges?
We want to make sure that 100% of your contributions are invested, that's why there are no initial charges on our group personal pension. Ongoing admin charges on a wide variety of the investment funds have annual management costs at or below 1% which keeps them in line with the government stakeholder pension charges initiative.
What happens to my money?
Your contributions are invested in a tax efficient environment that can help them to grow into a retirement fund for your future.
Who is the Umbrella pension scheme invested with?
The scheme is with Norwich Union. This provider has been chosen because they offer a wide range of funds offering more choice whilst maintaining their position as a recognised institution. The advisors at ContractorFinancials feel confident that Norwich Union will continue to provide specialist pensions to suit our clients.
How do I join the scheme?
It is very easy to join the scheme via email, telephone or post and further information can be requested by calling 0845 062 8888 or email firstname.lastname@example.org. Once you have joined your personal pension documents will be sent to you. How much can I invest?
How much can I invest?
The Umbrella group personal pension scheme is run on a salary sacrifice basis whereby we pay a portion of your salary into the pension for you without deductions for tax and NI. This can be done on a weekly or monthly basis according to how you invoice and as long as you take the minimum wage and pay your Umbrella fees and expenses, you are able to invest the rest of your income into the pension. This allows you to take advantage of significant tax deductions so that more of your money makes its way into your pocket.
The amount you invest should not exceed the following levels:
Annual Allowance - £50,000 for tax year 2011/12
Lifetime Allowance - £1.8 million for tax year 2011/12
When you decide to take your pension benefits your fund is tested against the lifetime allowance and please note that in the unlikely scenario that it would exceed the current level, a tax charge of 25% is levied against any benefits taken as a pension and 55% for any taken as a cash lump sum. Any contribution over the annual allowance would result in a 40% tax levy being applied.
You can also personally contribute to the scheme alongside your salary sacrifice arrangement. This can be up to 100% of your net income or savings although this will be subject to National Insurance deductions.
How will my money be invested?
There is a wide choice of stock market, bond and property funds from all over the World that are available to you through your Umbrella group personal pension and these will be supplied with your personal illustration. Contractor Financials are happy to help you to pick the appropriate portfolio of funds to suit the level of risk you are looking for in your investment.
It is important to note that past performance is no guarantee of future returns and the value of units within your pension can fall as well as rise.
How can I track the progress of my investment?
It is important to keep up to date with the progress of your investment, so before you join the scheme you will be sent a personal illustration of the expected benefits of your plan. You will also be sent a Statement of benefits on each anniversary of you joining the scheme, illustrating how your contributions are being invested and their value to date.
Can I invest in other pension plans?
You can invest up to 100% of your gross salary into some alternative pension schemes alongside your Umbrella group pension. However, it is important to note that these personally funded investments will be subject to employer and employee national insurance deductions making them far less tax efficient than the Umbrella group pension schemes.
If you have existing pension plans with other providers then you can transfer the funds into the Umbrella group pension without incurring any set up costs and the low charges on the Umbrella scheme may help you reduce costs on your retirement portfolio.
At what age can I retire?
The current scheme is set for retirement at 65 but you can choose to take the benefits from the age of 55 to 75 without incurring any penalties and whether you choose to retire or not. The flexibility of the scheme means that you don’t have to take your pension at the standard retirement age.
Is this scheme a stakeholder pension?
We prefer the wide choice of investments and low admin costs that are associated with a group personal pension and for this reason we have decided not to use a stakeholder pension for the Umbrella scheme. Due to the nature of the group personal pension there are no set up costs involved and the annual management charges are at or below 1% of the fund on most investments. This falls well within the 1.5% government cap on stakeholder charges so the scheme is free from the steep charges that are often associated with pension schemes.
Are there any admin charges?
The Umbrella group personal pension scheme benefits from not having any set up costs so that every penny you invest is paid straight into your chosen funds. The scheme carries an ongoing annual management fee of just 1% of most funds which keeps it well within the governments cap on stakeholder charges of 1.5%.
What if I am unable to work due to sickness or accident?
If you cannot contribute to your pension due to sickness or accident preventing you from working then your pension will suffer and this can have a huge impact on your retirement plans. In order to protect yourself and your future retirement you should consider taking out an income protection (PHI) policy.
This is especially important for contractors as you are without the benefits package that a permanent employee would receive to cover income and help to fund household expenses. Your contracting status makes you more susceptible to loss of income in the event of an illness or injury but Contractor Financials would be happy to help you bridge this gap and secure your future. Call 0845 062 8888 or email email@example.com
Who will the funds pass to if I die prematurely?
If you die before retirement then the full accumulated value of your pension will be passed to your dependents. If you want to specify a recipient then this can be recorded in the ‘expression of wish’ form.
What happens if I leave Umbrella?
Your pension will be written in your own name, giving you the flexibility to move it with you if you leave. There are three options if you leave Umbrella:
You can continue your pension by either contributing personally or asking a new employer to pay the scheme on your behalf.
If you choose not to continue contributions but you don't want to close the pension fund then it will become "paid up" which means that the fund will continue to be invested without any further contributions and you can restart the policy at any time in the future.
You can transfer your pension's value to another pension scheme although we would advise that you seek professional advice before doing so. Contractor Financials would be happy to assist in this matter.
What will happen when I retire?
It is impossible to predict the value of your pension on retirement as there are a number of contributing factors and it will be affected by the level of annuity rates at the time of conversion. However, the personal illustration that you will be given before you open the pension will include an estimate of the end value of your pension based on a number of assumptions.
When you decide to retire and begin drawing benefits from your pension, you will be given the option to choose how it is paid, for example you have the option to take up to 25% of the value of your pension as a tax free cash lump sum. There are a number of different options available to you at that stage and Contractor Financials would be happy to help you decide which one suits your individual needs.
Where can I get more information?
The advisers would be happy to recommend a number of investment opportunities to suit your individual requirements. They can offer consultations via email, telephone or in person and pride themselves on their specialised knowledge of Contractor pensions.
As Independent Financial Advisors they are able to offer advice on your existing investments alongside the Umbrella scheme and would be happy to offer you an unbiased opinion.
To find out about the scheme and to receive a personalised quotation please contact
Call 0845 062 8888 or email firstname.lastname@example.org
Financial advice is given by Contractor Financials, which is a trading name of Contractor Financials Ltd and is regulated and authorised by the Financial Services Authority.
Umbrella have been very helpful.