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Workplace pension vs sipp - UK Question
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Lorrie
Posted: 14 July 2024 09:36:03(UTC)
#1

Joined: 27/05/2024(UTC)
Posts: 2
I've got a question regarding having a workplace pension versus a sipp.

I'm a minimum wage worker, full-time hours, my employer has not been paying into the pension for several months now. The pension regulator will obviously be involved because it's over the 90-day period where it gets automatically referred onto the pension regulator to look into it.

I'm actually considering opting out of that pension to stop them hoarding any more of my money and I can invest it myself! The pension can't be transferred elsewhere until it's caught unfortunately. I pay the standard 5% and they 3%.

My question is that I want to save additional money into that pension myself every month on top of my contributions by salary sacrifice; obviously I don't want to go though my employer because they're hoarding the money and not putting it in.

Unfortunately this pension provider only allows to do any pension top ups if you like, twice per year so that's no good to me and I want to do it on a monthly basis.

I wanted to know is the pros and cons, and what I would lose by opening a sipp pension?

Thanks for your input.
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SF100
Posted: 15 July 2024 09:16:05(UTC)
#2

Joined: 08/02/2020(UTC)
Posts: 2,259

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Hopefully your employer will join the party and get the scheme and your investment sorted out.
I think that would be the best outcome for you.
However, I realise that this may drag it's heels and be a source of great anxiety for you.

If you contribute to the workplace pension scheme via salary sacrifice, you save paying (1) income tax & (2) national insurance, on the portion 'sacrificed'. It would be worth looking at NI rates for your level of income to understand just how much of a saving (.... which is a pension contribution) that translates to.

If you want to pay into a SIPP, this would be from your pay-packet after both income tax and NI had been deducted by your employers payroll team. However, the provider of the SIPP (eg Vanguard) would normally automatically reclaim the income tax from HMRC on your behalf, and add it to your SIPP - typically 8 weeks after you'd added your money. But you wouldn't get the National Insurance back, nor would you be getting the employers contribution.

Good luck getting things sorted out and don't let your employer away with it.
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2 users thanked SF100 for this post.
Nigel Harris on 15/07/2024(UTC), Suburban Lesley on 19/08/2024(UTC)
Newbie
Posted: 15 July 2024 09:37:33(UTC)
#3

Joined: 31/01/2012(UTC)
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Do not forget that with a SIPP you yourself need to actually reclaim the higher rate tax relief from HMRC via a letter, some form (I forget which one), self assessment.
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Suburban Lesley on 19/08/2024(UTC)
Busy doing nothing
Posted: 15 July 2024 09:55:46(UTC)
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Joined: 01/03/2021(UTC)
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No letter required, as earnings are based on minimum wage. Depending on the amount of money that you are thinking of investing monthly, maybe an option could be a stakeholder pension.
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SF100 on 15/07/2024(UTC)
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