SIPPs and Company Pensions
We receive regular enquiries from customers who are already enrolled in a workplace pension scheme but want to know whether they can open a self invested personal pension (SIPP) alongside it.
This article is going to explain whether this is possible, what the implications are, and the SIPP pension auto enrolment process.
Can I have a SIPP as well as a company pension?
Currently, the UK State pension equates to just over £8,700 annually (less than minimum wage earnings for a year). It therefore comes as no surprise that people are looking for other ways to safeguard their financial future.
Fortunately, it is possible to have a SIPP and occupational pension at the same time, and you are not required to close and move your workplace savings account in order to open a SIPP to receive the additional benefits.
People sometimes ask us whether their job role affects their pension rights. No, regardless of your occupation, whether you’re an office worker, teacher, or employed by the NHS, you can open a SIPP alongside other pension schemes in order to boost your retirement income.
Should I move my company pension to a SIPP?
If you’re considering moving the money from your workplace pension to a SIPP there are a number of factors you need to consider.
How do the contributions compare?
Your total contribution to any pension scheme is capped at the annual allowance, which is currently £40,000 per tax year.
While the maximum level of contributions don’t differ between an occupational scheme and a SIPP, if you choose to leave your workplace pension there could be consequences.
For example, while some employers may be happy to contribute to your SIPP, they are under no obligation to. If they do, there may be caveats, such as stipulating that you match their contributions.
How flexible is each scheme?
SIPPs are renowned for their investment flexibility, which is why they can be such an appealing prospect over a workplace pension.
Usually, occupational schemes would see the firm making the investment choices, whereas as a SIPP opens you up to not only funds but directly in stocks and shares, as well as larger assets.
What benefits do each include?
Historically, occupational schemes have enhanced benefits over a SIPP, which is why many people choose to open up a SIPP alongside their workplace pension, to reap the benefits of each.
It’s worth checking how the death benefits vary between SIPP and your current scheme.
If you are considering moving your workplace pension funds to a SIPP, it’s highly recommended that you work with one of the experts we work with who understands the complexities of the process, and can advise you along the way. Make an enquiry.
Is a SIPP a qualifying scheme for auto enrolment?
“Auto enrolment” means you are automatically enrolled into a workplace pension. The scheme was first introduced in October 2012 for larger companies.
Many customers who have opted out of a workplace pension plan, or are part of both an occupational and personal pension plan, want to know whether a SIPP qualifies for auto enrolment.
While your employer can still contribute to your SIPP as well as (or instead of) your workplace scheme, you will not be automatically enrolled. However, they are legally required to contribute to any workplace plan unless agreed otherwise.
To receive regular contributions to your SIPP from your employer, they will have to complete a SIPP direct debit form.
Will I be auto enrolled if I have a group SIPP?
Many employers offer a group SIPP, usually to a select set of employers such as directors or senior partners. Together, these individuals have access to the full range of features of the combined SIPPs.
As with any workplace pension, your employer is legally required to auto enrol you into any qualifying scheme.
Talk to a pensions expert today
To discuss whether having a SIPP and occupational pension is right for you, or to find out more about SIPP auto enrolment, contact Online Money Advisor on 0808 189 0463 or make an enquiry here.