Pension Schemes and Umbrella Companies

The Pension Regulator (TPR) is the UK regulator of work based pension schemes. Under the Pension Act 2008, TPR requires every employer in UK to put staff in a scheme and contribute towards it. This practice is called automatic enrolment. The employer must at least employ one member of staff to fall under the law.

There are two types of workplace pension schemes, a defined contribution pension scheme, the other type is a defined benefit pension scheme.

A defined contribution scheme is a pension pot based on how much is paid in. A defined benefit pension scheme is one where the amount you’re paid is based on how many years you’ve worked for your employer, also the salary you’ve earned. In this case, the employer is responsible for ensuring there’s enough money at the time you retire to pay your pension income.

Due to the number of staff employed, umbrella companies create such schemes. They also give staff the option to pay into their created schemes. In many cases, if staff pay into the scheme, employers also contribute to them on behalf of the staff e.g. staff may pay 5% of their wages, employers pay 3% of the staff wage. The percentage amount employers pay into a staff’s pension scheme is set by the HMRC.

The Pension Ombudsman regulates the affairs and handles complaints about all the pensions schemes in the UK. The only problem with staff paying into pension schemes in umbrella companies is they may not spend long periods in employment, which results in employees having contributions into various schemes for short periods.

For further information on pension schemes, call them on 0345 600 1011, visit, or email You can also write them at:

The Pension Regulator
P O Box 332

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