Personal Pension v SIPP?

HarryGray

Hi,

I earn enough from my side salary to live off each month, and therefore only need my workplace salary to pay my rent (30% of my income). I am currently contributing 5% into the workplace pension (salary sacrifice) and the employer matches upto 5%.

I predict that I will max my ISA contribution for the tax year. I am investment savvy so happy to invest myself but not bothered. I know I should start contributing more of my workplace salary to my pension, but should I do it through my workplace pension as salary sacrifice, or open a SIPP and do it after my salary has been paid to me?

Thank you

HarryGray

Not sure if it makes a difference - but I'm a basic rate tax payer

jaybeetoo

Does your employer provide matching contributions to your workplace pension?

What are the charges of your workplace pension v SIPP?

AnotherJoe

Since your employer pays into your salary via salary sacrifice, you'll gain paying into their scheme because you'll pay less NI.
The other advantages to pay into employers is simplicity and probably low pension charges.
If you go it alone, it does gives the advantage of another option, maybe get better performance or take one earlier whilst leaving the other alone, hwoever since the sums are fairly low I think it would tend towards just upping your contribution at work.

HarryGray

jaybeetoo wrote: »

Does your employer provide matching contributions to your workplace pension?

What are the charges of your workplace pension v SIPP?

The employer matches up to 5%, so I already utilise that.

The charges are slightly lower overall for the workplace pension. I think the fund cost is 0.2% and the other fees are 0.3% so 0.5% in total. My SIPP would be around 0.6% overall.

HarryGray

AnotherJoe wrote: »

Since your employer pays into your salary via salary sacrifice, you'll gain paying into their scheme because you'll pay less NI.
The other advantages to pay into employers is simplicity and probably low pension charges.
If you go it alone, it does gives the advantage of another option, maybe get better performance or take one earlier whilst leaving the other alone, hwoever since the sums are fairly low I think it would tend towards just upping your contribution at work.

Thank you for this. One question, if I start paying less NI, do I still get benefits to the state pension?

xylophone

One question, if I start paying less NI, do I still get benefits to the state pension?

As long as you earn enough to pay or be credited with NI.

https://www.gov.uk/national-insurance

https://www.aegon.co.uk/support/faq/Understanding-our-products/retirement-products/workplace-pensions/what-is-salary-sacrifice.html

Have you obtained a state pension statement?

https://www.gov.uk/check-state-pension

HarryGray

xylophone wrote: »

As long as you earn enough to pay or be credited with NI.

https://www.gov.uk/national-insurance

https://www.aegon.co.uk/support/faq/Understanding-our-products/retirement-products/workplace-pensions/what-is-salary-sacrifice.html

Have you obtained a state pension statement?

https://www.gov.uk/check-state-pension

That's great thanks. Although the employer definitely won't share any of the benefits with me that they save in NI as they say they match 5% which is enough benefit for me!

HarryGray

I guess another query is, shall I only start topping up my pension contributions once my ISA has been maxed? As a Basic rate payer I'll be taxed on the way out and have relief on the way in?

Whereas with an ISA I am taxed on the way in effectively and not on the way out?

MallyGirl

you are only taxed on the amount over your personal allowance of £11k approx. And that is only on 75% of the drawdown

atush

With SS, paying BRT the workplace pension is the winner.