Stakeholder Pensions - Employer/Employee Contributions?

falcon21

Hello Everyone,

I am the Managing Director of a Ltd company and I am looking for tax efficient ways to take money out of the company to pay myself.

I'm interested to know how much can an employer can contribute to a Stakeholder Pension? Could they contribute 100% with the the employee contributing nothing from their pay? Eg. £2,808. Would this still be boosted to £3,600 in Tax relief?

I did actually scour the revenue's website, but couldn't find the answer!

dunstonh

The contribution is based on the individual's earnings. Whether it is paid for by the company or by the individual doesn't matter. You may also want to consider an EPP which will give you slightly different options to that of a SHP (or PPP).

Next April, the contributions limits change (for the better).

isasmurf

The total amount allowed to be contributed to a Stakeholder Pension by the individual and employer is a percentage of earnings as dunstonh says. The percentage is determined by your age. Only earnings up to the earnings cap (I think its £104,000) are taken into account. These limits include tax relief.

Age on first day of tax year (6 April) - Maximum percentage of earnings
35 or under - 17.5%
36-45 - 20%
46-50 - 25%
51-55 - 30%
56-60 - 35%
61-74 - 40%

However, there are other rules for contributing to a Stakeholder Pension scheme which may prevent you from doing so including,
You cannot contribute to a SHP if you are a controlling director
are in an Occupational Pension and earn more than £30,000 (earn less than £30k maximum you can put in is £3,600)

DavidLaGuardia

isasmurf wrote:

However, there are other rules for contributing to a Stakeholder Pension scheme which may prevent you from doing so including,
You cannot contribute to a SHP if you are a controlling director
are in an Occupational Pension and earn more than £30,000 (earn less than £30k maximum you can put in is £3,600)

This particular rule is so easy to circumvent with a bit of paper work, one wonders what the point of it is. As soon as any individual has other unconnected earnings (e.g. a fireman working in a bar) they have pay that can be treated as eligible for personal pensions and the minimum is £3,600. Where an individual in an occupational scheme is on over £30,000 they can declare other earnings (e.g. self employed earnings of a fiver for mowing their nextdoor's lawn which they pay tax on) and hey presto they can put £3,600 into a stakeholder pension.