Pension Contribution - Salary Sacrifice or Lump Sum?
Pension Contribution - Salary Sacrifice or Lump Sum?
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Discussion

VladD

Original Poster:

8,201 posts

295 months

Wednesday 13th October 2021
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I'm currently working as a contractor through an umbrella company. The umbrella company can set up a salary sacrifice scheme and pay it into my personal pension, but I'm wondering if it's just easier to make a lump sum payment once a year and then sort out the tax situation via self assessment. Any pros or cons either way?

LeoSayer

7,840 posts

274 months

Wednesday 13th October 2021
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Salary sacrifice is more tax efficient because it won't include employee or employer NI.

VladD

Original Poster:

8,201 posts

295 months

Wednesday 13th October 2021
quotequote all
Ah, of course, thanks.

theboss

7,532 posts

249 months

Wednesday 13th October 2021
quotequote all
As above. Some umbrellas are better than others at facilitating this. The best arrangement is one where they will sacrifice as much as you request (bar a minimal income threshold of national minimum wage), contribute the whole gross sum rather than attempting to trouser the employers contribution elements for themselves, and will contribute to a scheme of your own nomination rather than their own.