If you're employed, you probably have a workplace pension. But you might also have heard of SIPPs. Here's how they compare and when you might use each.
Workplace pension
A workplace pension is set up by your employer. If you're eligible, your employer must automatically enrol you and contribute on your behalf.
Key features:
Your employer contributes – this is essentially free money on top of your salary
Contributions are taken directly from your pay
You get tax relief on your contributions
Investment options are usually limited to a small range of funds chosen by your employer or their pension provider
Auto-enrolment minimums:
By law, minimum contributions are currently 8% of qualifying earnings, with at least 3% coming from your employer. Many employers offer more generous contributions.
SIPP (Self-Invested Personal Pension)
A SIPP is a personal pension you set up and manage yourself. Your Chest pension is a SIPP.
Key features:
You're in control – you decide how much to contribute and when
Greater investment choice than most workplace pensions
You can consolidate old pensions from previous jobs
No employer contributions (unless you arrange this separately)
You still receive tax relief on your contributions
Can I have both?
Yes, absolutely. Many people have both a workplace pension and a SIPP. This can be a smart approach:
Keep your workplace pension to get your employer's contributions – don't leave free money on the table
Use a SIPP for additional savings, more investment control, or to consolidate old pensions
When a SIPP makes sense
A SIPP is particularly useful if you're:
Self-employed and don't have access to a workplace pension
Wanting to save more than your workplace pension allows
Looking to consolidate pensions from previous employers into one place
Wanting more control over how your money is invested
Interested in features like cashback that can boost your pension
What about old workplace pensions?
If you've changed jobs, you might have workplace pensions sitting with previous employers' providers. You can often transfer these into a SIPP like Chest to bring everything together in one place. See our article on transferring a pension into Chest for more details.
Still need help?
If you have questions about workplace pensions or SIPPs, contact us at hello@joinchest.com.