AVC or Personal Pension/SIPP

tel_

Apologies, as I'm sure this question has been asked many times!

I have paid into my workplace pension now for over 10 yrs without much thought to it. However, I pay the highest % contribution my employer allows me to pay in (and of course, they match that), but I feel it's not enough, and I want to pay more.

So the dilemma is:

Stick to paying more through AVC's with my employer, or start a Personal Pension or SIPP?

I understand that a Personal Pension/SIPP gives me flexibility, in regards to if I leave my current employer (of which I don't plan to), I can carry-on paying into it.

But what are the benefits of AVC's? I can't see any advice on MSE about these.

Feel free to 'chuck-in' your thoughts people.

DUTR

If you already know about AVC's then you know your contribution is pre tax etc, so your £68 is worth £100 in your AVC.

tigerspill

The only real benefit of an AVC is if you have a Smart Pension where you save on National Insurance as well as tax.
Most employer AVCs are often very restricted in terms of the funds you can use. And high fees.
My OH is in the same situation, and her employer doesnt offer Smart Pensions so is going down the SIPP route

tel_

I will look into my company's AVC scheme firstly, but my initial thoughts are leading towards a SIPP (have signed up to Vanguard's SIPP notification email like others).

No wonder people are put off by pensions - far too complex. Looks like more 'research' followed by MORE 'research' for me. :huh:

Zorillo

Are you sure you pay in the maximum allowed by your company, rather than just the maximum they will match?

My employer only matches up to a wretched 6%, but I'm not aware there's an upper limit on my own contributions.

DUTR

Zorillo wrote: »

Are you sure you pay in the maximum allowed by your company, rather than just the maximum they will match?

My employer only matches up to a wretched 6%, but I'm not aware there's an upper limit on my own contributions.

There is an upper limit now, as some would could contribute so much that it brought them below NLW.

tel_

Zorillo wrote: »

Are you sure you pay in the maximum allowed by your company, rather than just the maximum they will match?

My employer only matches up to a wretched 6%, but I'm not aware there's an upper limit on my own contributions.

Hence why it's called AVC isn't it?

Marcon

DUTR wrote: »

There is an upper limit now, as some would could contribute so much that it brought them below NLW.

Minimum wage only becomes an issue if contributions are paid by salary sacrifice.

Marcon

DUTR wrote: »

If you already know about AVC's then you know your contribution is pre tax etc, so your £68 is worth £100 in your AVC.

Not sure what you mean by 'pre tax etc' or how you get to £68 being worth £100 in the AVC. If the contribution is deducted from gross salary, the amount that contribution is 'worth' in the employee's AVC is whatever they actually pay into the AVC. There is no tax reclaimed on their behalf by the pension provider.