Employer pension contributions
What is an employer contribution?
It's a payment made by an employer into an employee's pension. The contribution could be in the form of salary sacrificed by the employee or come direct from the company.
What are the benefits of an employer contribution?
Tax is a complex subject so if you're at all unsure you should seek professional advice. Tax benefits depend on individual circumstances and tax rules can change.
How much can my employer contribute?
Unlike personal contributions, employer contributions aren't limited to what the employee earns. A company could contribute more than the employee's earnings - up to the current annual allowance of £40,000, or up to £160,000 in some circumstances if using carry forward. If the employee has 'adjusted income' over £150,000, contributions might be limited to £10,000 - see our factsheet. If the employee has already accessed a pension, different rules can apply.
This is particularly beneficial for controlling directors who often take a small salary and large dividends to benefit from the tax advantages. As dividends don’t count as ‘relevant UK earnings’ the amount of personal contributions they could make is low. However, with an employer contribution, they can receive contributions greater than their salary, giving them more money in retirement.
NOTE: HM Revenue & Customs (HMRC) could question the contribution if the total salary and benefit package is excessive for the work undertaken. Contact your accountant if in doubt.
How can I make an employer contribution?
If you’re authorised to make payments on behalf of your company, and you’ve registered your company details with us, you can use your company’s debit card to make employer contributions to your HL SIPP online. Unlike a cheque or bank transfer, you won’t have to wait for the cheque to arrive or your money to clear. It will be available to invest right away.
Before applying please make sure you've read and understood the:
SIPP Key Features (including Contribution Checklist)
Simply log in to your account as normal and click the blue ‘Top up’ button. You’ll see the ‘Employer contribution’ tab, where you can enter your company debit card details and make a gross contribution to your SIPP. Before applying, it’s important you understand the risks and features of the HL SIPP.
If you’d like to register your company details with us so you can make contributions online, just call 0117 980 9926. We can set everything up in one phone call.
If you aren’t authorised to make payments on behalf of the company, your employer can pay in by cheque, bank transfer, and/or Direct Debit. Employer contributions are paid gross. This means basic-rate tax relief is not deducted from the contribution. We also accept employee contributions which are paid by the employer and deducted from net pay (after tax and National Insurance). To do this, you’ll need to complete this form.