Workplace Pension - Contractor's Umbrella Company

McAhuna

Hi
Anyone with any knowledge of Umbrella Companies for Contractors?

I have been a contractor for a few months employed through an Umbrella Company. They offered a workplace pension, but I opted out because:
1) The umbrella said that both employer's and employees contributions came off my gross income.
2) The pension provider had terrible reviews and reputation.

Subsequently, several people have questioned the legality of point (1), including the govmnt advice line 'Pension Wise', IFAs and the Pensions Regulator - all over the phone and none would confirm 100% that it was illegal.

Furthermore, the practice of making employers contributions off the gross income of employers seems common place within contracting, so I am now quite confused by the whole issue.

I would be most grateful for any advice.

Brynsam

You're getting vague and conflicting answers because people generally don't understand umbrella companies.

In an umbrella company, it is the contractor who will ultimately have to fund the employer!!!8217;s contribution, so point 1 is both correct and legal. Employer contributions are always paid gross.

cjking

The money paid to the umbrella is to cover the cost of employing you. It has to cover all employer expenses, typically (a) your salary, (b) employers NI, (c) any expenses you claim, (d) employer pension contributions and (e) the cost of administering all the aforementioned, which is the umbrella company fee.

If you don't like the umbrellas pension company, move to a different umbrella. You should be able to do this even mid-contract, the agency won't care. (At least mine didn't, I have moved contracts to a different intermediary several times.)