SIPP Or Company Pension Plan

ChloeRadshaw

Can anyone explain to why you would go down the Sipp route if you have a company pension which allows you to invest in a large number of funds?

The reason why I ask is I normally contribute about 16K each year to my own pension through the company scheme

This means I do not have to fill in a tax return and it also means that I save 1% empoyees NI.

Am I missing something obvious here?

EdInvestor

If the company makes a contribution into the scheme as well, then obviously that is the pension you should use.

If however the 'company pension' is just a shell stakeholder with no money going in from the company, then a SIPP might well be a better choice.

purch

Am I missing something obvious here?

No, there is no obvious reason why you wouldn't use your company pension.

In my opinion there should always be a very good and obvious reason before anyone should consider using a SIPP.

dunstonh

Can anyone explain to why you would go down the Sipp route if you have a company pension which allows you to invest in a large number of funds?

Depends on the terms of the company scheme vs the terms of the SIPP and the investment options available to you. A SIPP (and the better personal pensions) offer vast investment options nowadays. Most company schemes do not (always exceptions of course). However, the employer contribution is where the company scheme tends to leave all personal schemes standing.

If however the 'company pension' is just a shell stakeholder with no money going in from the company, then a SIPP might well be a better choice.

Or individual personal pension or stakeholder as well. Not just SIPP. If there is no "free money" then using the employer's arranged scheme narrows your choice.

The opp sounds like she is talking about a COMP rather than a group scheme though. So, its a different beast to a group/individual arrangement.

In my opinion there should always be a very good and obvious reason before anyone should consider using a SIPP.

And I thought I was the lone voice on here that says that.

ChloeRadshaw

Can you give examples of such reasons?

purch wrote: »

No, there is no obvious reason why you wouldn't use your company pension.

In my opinion there should always be a very good and obvious reason before anyone should consider using a SIPP.

jem16

ChloeRadshaw wrote: »

Can you give examples of such reasons?

1. You want to place investments inside the SIPP wrapper that you can't do within any other pension wrapper - i.e. shares.

purch

1. You want to place investments inside the SIPP wrapper that you can't do within any other pension wrapper - i.e. shares.

2. Errrrr

3. That's it !!!!!!

ChloeRadshaw

Fair point that you do get less of a choice - But the funds available are quite broad and not just from one provider

In any case - If you went down the Sipp route you would be paying a 1% NI fee which you would not if you went down the employee fund route.

dunstonh wrote: »

Depends on the terms of the company scheme vs the terms of the SIPP and the investment options available to you. A SIPP (and the better personal pensions) offer vast investment options nowadays. Most company schemes do not (always exceptions of course). However, the employer contribution is where the company scheme tends to leave all personal schemes standing.
Or individual personal pension or stakeholder as well. Not just SIPP. If there is no "free money" then using the employer's arranged scheme narrows your choice.

The opp sounds like she is talking about a COMP rather than a group scheme though. So, its a different beast to a group/individual arrangement.

And I thought I was the lone voice on here that says that.

DavidLaGuardia

ChloeRadshaw wrote: »

In any case - If you went down the Sipp route you would be paying a 1% NI fee which you would not if you went down the employee fund route.

Why assume that the employer would not agree to a salary sacrifice in order to pay into the SIPP and thus the 1% would not apply?