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Trapped in Employers Pension?

My employer set everyone up using Standard Life the other year. Yes we could 'opt out', but there would be no contributory (1%) benefit applied.

I've reviewed the Standard Life pension plan. The performance is appalling. The fees and charges opaque. There's not much control either.

I want to switch to a SIPP with another provider but my employer says that they can only pay into the SL pension as they only support one dedicated provider - and that I can personally pay into my own personal pension, but obviously there's no taxable benefit as it's all post-income-tax.

What?

So effectively, to have the tax benefit I'm trapped with Standard Life and with that specific product!


Surely this can't be right?
(but looking online, it seems so?!)
«134

Comments

  • Malthusian
    Malthusian Posts: 11,055 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper Photogenic
    and that I can personally pay into my own personal pension, but obviously there's no taxable benefit as it's all post-income-tax.

    That part is nonsense. If you are eligible for tax relief then you will get it whichever pension plan you contribute to. It may be post income tax but the other provider will claim 20% tax relief from the government and gross it back up. If you are a higher rate taxpayer you claim the remaining tax relief via self-assessment.

    However you will be throwing away the 1% from the employer. It is quite normal for employers to only pay into the workplace arrangement. You can always do a partial transfer out of the Standard Life pension every so often assuming Standard Life allow it. I.e. leaving the minimum with Standard Life so the plan stays open for future contributions.
  • Lokolo
    Lokolo Posts: 20,861 Forumite
    Part of the Furniture 10,000 Posts
    So you expect your employer to be able to set up administration so that any employee can decide to join any pension scheme?

    As to contributing to your own personal pension outside of the employer scheme, you do get taxable benefit, you just don't get NI benefit (like you would with a salary sacrifice scheme).
  • omega27
    omega27 Posts: 260 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    You can do a partial transfer to PensionBee or Nutmeg, so probably other pension providers offer this service. This will move 70%-100% of the pension value over, but leave the pension in place so your employer can keep paying in.
  • xylophone
    xylophone Posts: 45,745 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Your employer has to comply with auto enrolment rules.

    He has chosen a compliant pension and makes the required contribution (which will gradually increase).

    https://www.gov.uk/workplace-pensions/what-you-your-employer-and-the-government-pay

    Presumably you want the employer's contribution so you stay in the scheme.

    You can contribute to a SIPP and receive tax relief on your contributions.

    Let us suppose that you want to contribute £100 a month from your salary to your SIPP.

    You actually pay the provider only £80 - the provider will claim 20% tax relief on your behalf.

    Higher rate tax payers claim additional relief from HMRC.

    https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

    https://www.standardlife.co.uk/c1/guides-and-calculators/managing-your-pension-tax-relief.page

    https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/the-annual-allowance
  • Skyhigh
    Skyhigh Posts: 332 Forumite
    Thank you for the quick responses - it makes far more sense (and to be frank, I was getting annoyed at being 'forced' into a pension).

    I think I'll keep the SL pension to get the 1% contrib, then pay personally into a SIPP and claim the tax back as required.

    Partial Transfer
    This is amazing. I'd looked to see if this was possible but clearly wasn't searching for the right terms.
  • Skyhigh
    Skyhigh Posts: 332 Forumite
    Lokolo wrote: »
    So you expect your employer to be able to set up administration so that any employee can decide to join any pension scheme?.

    Yes, yes I do. Because that creates flexibility and makes sense.

    I realise there's obviously an admin overhead - but really we're just talking about sending £payments to a specified account on a monthly basis.

    I'm sure there will be (or would be, if it were more popular) third party providers to offer this. Yes, with an admin overhead.

    It seems relatively simple, and importantly, the best thing for employees to have more easy choice.
  • atush
    atush Posts: 18,731 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    (and to be frank, I was getting annoyed at being 'forced' into a pension).

    Well people are being 'forced' as far too many think like you and dont take one out on their own account and look to the state to top up when they dont have enough to live on? Not to mention too many employers werent offering one.

    Your problem is easy. Just put in the amt to your employers pension you need to, to get their 1% (or more in the coming years when they have to up it). Pay the rest into any personal pension or Sipp of your choice.

    After all, if you each pay in 1%, 2% total- that is the pension rate of a child who is in reception year- you need to pay more in anyway? half your age really.
  • HappyHarry
    HappyHarry Posts: 1,848 Forumite
    Tenth Anniversary 1,000 Posts Name Dropper
    I've reviewed the Standard Life pension plan. The performance is appalling. The fees and charges opaque. There's not much control either.

    The fees and charges should be absolutely clear. As a qualifying Auto Enrolment pension, the maximum charge for your default funds is 0.75% per annum.

    The performance is due to the funds you are invested in, not the pension plan itself. Most Standard Life default funds are decent performers within their peer groups. However, the default funds tend to invest in multi-asset average risk areas, which can't sensibly be compared to some of the pure equity high-flyers / heavy crashers out there.

    You should be able to choose to invest in a range of different funds within the plan, though some will charge more than the defaults.

    As others have said, at worst, make sure you put enough in your employer's scheme to maximise their contributions, and, if you are not happy with their plan, put your additional contributions into a plan of your own choosing.
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
  • Skyhigh
    Skyhigh Posts: 332 Forumite
    atush wrote: »
    Well people are being 'forced' as far too many think like you and dont take one out on their own account and look to the state to top up when they dont have enough to live on? Not to mention too many employers werent offering one.

    Think before you get personal please as you're not aware of others circumstances. All I'll say is that our first childs severe health problems and spending a lot of time in hospital has pushed everything to the back of the line over the last few years.

    I'm reviewing this now is due to it's importance. I don't even expect there to be a State Pension when I get to retirement age in 30-40 years.
    atush wrote: »
    Your problem is easy. Just put in the amt to your employers pension you need to, to get their 1% (or more in the coming years when they have to up it). Pay the rest into any personal pension or Sipp of your choice.

    Good point, this is what I've already concluded to do. Thank you.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Skyhigh wrote: »
    I realise there's obviously an admin overhead - but really we're just talking about sending £payments to a specified account on a monthly basis.

    Then presumably you'd be happy to make a contribution to pay for having a bespoke service?
This discussion has been closed.
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