Private pension contribution is an arrangement where an employee agrees to reduce their Assignment Rate in exchange for increased pension contributions from their employer. This results in a lower salary for the employee, but the sacrificed amount is paid directly into their pension, leading to potential tax and National Insurance savings for both the employee and the employer.

The main advantage of this type of private pension contribution is the potential for higher take-home pay due to lower National Insurance contributions, as well as the increased tax efficiency of pension saving.

So the concept is straightforward – but how much will you actually save?

Because you exchange a portion of your Assignment Rate for pension contributions, you are more tax efficient because the pension is paid over to your chosen provider as a Gross Employer contribution, so no tax is deducted from this amount.

In terms of overall savings, here is what you can expect:

-Employment costs: This includes 13.8% Employer NI and 0.5% Apprentice Levy.

-Employee PAYE Tax: 20% for income within the relevant banding and 40% for higher rate earners.

-Employee NI: 12% for income within the relevant banding and 2% for income beyond that.

If there are any additional fees associated with processing your SIPP (Self-Invested Personal Pension), we will inform you upfront and provide clear details on your payslips.

*Please note that an admin fee of £25 will apply if the contribution levels are changed mid-assignment.