Workplace pension vs personal contribution

btcp

My friend has a workplace pension where employer pays in a minimum and don’t match their contribution. The pension scheme is not a salary sacrifice, i.e. pension contribution is deducted from salary after tax paid. They want to increase pension contribution.  In this instance, does it make a difference if they transfer money directly to pension provider time to time  or ask employer to increase pension contribution? I cannot figure out a difference besides the fact that deductions from pay check are in the equal amount and done for you. With paying directly, they can have more control which month to take more money home. Pension provider will add 20% relief at source in either way. Higher tax relief needs to be claimed by them contacting HMRC in both instances too. 

NottinghamKnight

Would be useful to know the sums potentially involved but in those circumstances than I'd go for a low cost SIPP.

Albermarle

You are right that it should not make any difference when the employee contributions are under a relief at source system.
Your friend would have to check with the provider to make sure it was OK to make separate contributions  . Normally it should be but the provider will probably want to know if ad hoc contributions should be invested the same way as the regular ones .
Maybe your friend will have to designate the investments every time an ad hoc  payment is made. 

btcp

NottinghamKnight said:

Would be useful to know the sums potentially involved but in those circumstances than I'd go for a low cost SIPP.

They want to increase a contribution to 1k a month or pay in 12k a year through separate transfers. Why do you suggest SIPP? They still want to keep the workplace scheme as employer contributes there - small amount but still. 

btcp

Albermarle said:

Your friend would have to check with the provider to make sure it was OK to make separate contributions  . Normally it should be but the provider will probably want to know if ad hoc contributions should be invested the same way as the regular ones .
Maybe your friend will have to designate the investments every time an ad hoc  payment is made. 

good point, I didn’t think of it. I make additional contribution to my scheme so just assumed they can do the same. 

Albermarle

The suggestion of a separate SIPP , is because it MAY have lower charges and will have more investment choices , although for many people this extra choice is not very useful or desirable as it can be confusing.

btcp

Albermarle said:

The suggestion of a separate SIPP , is because it MAY have lower charges and will have more investment choices , although for many people this extra choice is not very useful or desirable as it can be confusing.

I see, makes sense. I don’t think it would make a huge difference to my friend, we are starting with basics and the amount is not big. 

NottinghamKnight

btcp said:

NottinghamKnight said:

Would be useful to know the sums potentially involved but in those circumstances than I'd go for a low cost SIPP.

They want to increase a contribution to 1k a month or pay in 12k a year through separate transfers. Why do you suggest SIPP? They still want to keep the workplace scheme as employer contributes there - small amount but still. 

Yes, put enough into the workplace scheme to get employer contributions and the rest into a sipp. It's possible the workplace scheme may be cheaper but the sipp is likely to offer more investment options, personal choice really