Pension FAQs

Yes, having a private pension doesn’t stop you receiving any state pension you are eligible for.

It doesn’t matter how many other pensions you have paid into over your career, as long as you have made the relevant National Insurance contributions for 30 years you will be eligible for the full state pension. If you have 10 years or more of relevant contributions, you will receive a partial state pension.

Brookson Advice:  
You can check your state pension status including how much it is currently worth and when you can begin taking it at gov.uk/check-state-pension

If you pass away your pension funds will be transferred to any financial dependants or the beneficiaries of your estate. 

When you die, your pension doesn’t just disappear. It may provide benefits to any financial dependants – such as children – or go to the beneficiaries of your estate. 

Exactly what benefits are paid out depend on the types of pension scheme that you have, and the age you die. To find out more, speak to your pension provider about exactly what they would provide. 

Brookson Advice:
To ensure that your pension provider knows your exact wishes should you pass away, you need to complete a ‘nominated beneficiary form’ for all the pensions you have.

Yes, though it may require you to give up certain guarantees. 

If you have multiple pension schemes, it can be hard to keep track of them all – especially old ones – and some can be expensive. It can therefore be appealing to consolidate them all into scheme, and it’s certainly possible, but it can come at a price. Consolidating can mean giving up guarantees or protected rights that you have on specific plans, so always seek advice before making any significant changes.

Brookson Advice: 
We offer a pension switch and transfer service, and can review your existing policies at any time. If we believe a change would be in your best interest, we can provide you with a formal transfer / switch recommendation. 

Yes, in fact it is one of the most tax efficient options available, if you are not IR35 captured.

Paying into a private pension through your limited company can be an excellent way to save for the future. As long as you meet certain eligibility criteria, you can make pension contributions directly from your company bank account, and these will then be treated as a business expense like any other. This means you can save whilst also reducing your corporation tax bill in the process.

Brookson Advice:  
Speaking to your Brookson Accountant and Financial Adviser about your plans will help ensure you are being as tax efficient as possible, whilst building up a good retirement pot for the future.  

Under current legislation, the earliest age you can draw a private pension is 55, however, this may change to 57 in the future, although there hasn’t been any legislation currently put in place. 

When deciding when to start taking your pension it’s important to remember that the earliest possible opportunity is not necessarily the best time for you. We advise all our contractors to discuss their ideal retirement age with us, so we can help them create a plan their retirement and make sure all their goals are met. To help make this as accurate as possible we conduct a shortfall analysis that tells you how much you need to save into your pension to give you a desired retirement income at a specific age.

Brookson Advice: 
Pensions are classed as long-term savings. If you want to discuss your retirement goals with one of our specialists, simply get in touch. 

The smallest pension contribution you can make is £1 per month. 

When you set up a pension it is important that you choose an affordable amount to save. The objective is to provide you with a decent income in retirement, and you can’t plan for the future effectively if you pay more than you can afford, or so little that you won’t build up a decent sized pot for when you need it. That’s why we recommend regular reviews to make sure your retirement objectives are appropriate, and that the amount you’re paying will see that you reach them. 

Brookson Advice: 
Never over-commit your pension payments. It is far better to choose an affordable monthly amount you know you can afford, then top up throughout the year if you can.

Contractors can make pension contributions in a range of ways, the most tax efficient being employer pension contributions made through their limited company (if they are not IR 35 captured).

Contractors can make pension contributions in a range of ways, the most tax efficient being employer pension contributions made through their limited company. 

If you are a contractor with your own limited company, you are an employee of that company. This means you can make employer contributions to a private pension in an extremely tax efficient way. Any payments you make from your limited company will be classed as an allowable business expense, reducing your annual corporation tax bill. However, if you are IR 35 captured, then making a company pension contribution may not be as tax efficient as making a personal pension contribution.

Limited company pension contributions can change depending on how well your company is doing. Umbrella salary sacrifice pension contributions are set by HMRC 

If you are making pension contributions from your own limited company, you are entitled to change the amount you pay on an ongoing basis. This means you can increase and decrease the amount in line with how your company is performing. In contrast, Umbrella Salary Sacrifice pension contributions have to adhere to HMRC rules. Even though you don’t have as much flexibility in how much you pay, it is still a highly tax efficient option.

Brookson Advice: 
Brookson Financial can offer support with your pension needs whether you find yourself inside or outside of IR35 rules.

Yes, your limited company can start its own pension scheme at any time.

Normally company pension schemes are set up for any companies who have a specific number of employees. Being over a certain size requires companies to arrange a pension scheme, then take contributions from salary and complete regular contribution uploads to the provider. 

Brookson Advice:  
If you are a director of a limited company and do not have any employees, we recommend that you set up the Aegon SIPP in your own name then make employer contributions  directly from your limited company. If you are IR 35 captured, then you should consider contributions via any employment ( PAYE or  Umbrella you may have).

Yes, as long as they are eligible and have paid the correct level of National Insurance.

Because contractors are employees of their limited company, they have to pay National Insurance on any salary income they take between certain thresholds. This is one of the ways that contractors can make the National Insurance payments required to claim a state pension when they reach retirement age. 

Dividends are not subject to National Insurance. So while it is more tax efficient to pay yourself with dividends, a small salary is still advisable to ensure you are making the contributions you need for a basic and additional state pension, when the time comes. 

This depends on the type of pension you have, but most schemes allow you to begin drawing from the age of 55.

As long as the terms and conditions of your contract allow, you don’t need the consent of your employer or provider to begin taking your private pension benefits from whatever age they allow – usually 55.  

If you’re a member of a workplace pension scheme, you probably will require the consent of your employer or ex-employer if you want to start taking the benefits early. In some instances, you may also need the consent of any pension scheme trustees.  

If you are a member of a defined benefits scheme, your pension may be reduced to account for the fact you are being paid early and for a longer period of time. The state pension age is currently 66 and is set to rise to age 67 between 2026 and 2028 and to age 68 between 2044 and 2046.