Pensions have long been the most efficient way of reducing tax and NI liabilities. For example; Pension contributions of £6,000 per annum would result in a tax saving of £2,400 for the higher rate taxpayer (assuming 40% higher tax band).

For contractors using an Umbrella Company or those affected by IR35, there are significant benefits of investing in a pension as it will reduce your overall national insurance and PAYE liability.   Some Umbrella Companies such as Parasol offer group schemes where pension payments can be made from gross salary saving the NI element in additional to the normal PAYE savings.

There are a wide variety of pension schemes available, it is essential that you get truly independent advice that could save you substantially. It is advisable to always consult an Independent Financial Adviser before you sign anything.