Compare · SIPP vs Workplace pension
SIPP vs workplace pension — which is the better UK pension?
In short. A workplace pension gets you free money in the form of employer contributions. A SIPP gives you more investment choice and platform flexibility. Most people benefit from using both.
These are different things, not direct competitors. A workplace pension is the scheme your employer must enrol you into under auto-enrolment. A SIPP is a personal pension you set up yourself and control directly. They have the same tax rules, but the cost structure and value proposition are different.
Last reviewed:
Side by side
| Criterion | SIPP | Workplace pension |
|---|---|---|
| Employer contribution | No — unless your employer offers SIPP contributions | Yes — minimum 3% under auto-enrolment |
| Your minimum contribution | Up to you | 5% of qualifying earnings under auto-enrolment |
| Tax relief | Same — basic rate added at source | Same — basic rate added at source (or via salary sacrifice) |
| Investment choice | Very wide — funds, shares, ETFs, bonds | Usually a limited fund list |
| Platform/management fees | Platform fee (often 0.15–0.45%) + fund OCF | Often 0.3–0.75% total |
| Salary sacrifice possible | Sometimes (if employer offers) | Often yes — saves NI for both sides |
| Access age | Normal Minimum Pension Age — currently 55, rising to 57 from April 2028 | Same rules |
| Annual Allowance | £60,000 (shared across all pensions) | £60,000 (shared across all pensions) |
When SIPP usually wins
- You want broader investment choice than a default workplace fund
- You are self-employed
- You want to consolidate old pensions in one place (check exit penalties first)
When Workplace pension usually wins
- Always — to capture employer contributions at least up to the matching threshold
- You want simplicity and a default fund that's regulated as appropriate
- Your employer offers salary sacrifice (NI saving)
FAQ
- Should I transfer my workplace pension to a SIPP?
- Usually not while you're still employed there — you'd lose ongoing employer contributions. Transferring old workplace pensions from previous jobs to a SIPP can make sense, but check for guarantees, exit penalties and any safeguarded benefits before moving anything.
- Can I have both a SIPP and a workplace pension?
- Yes — they share the £60,000 Annual Allowance and the tax relief is the same. Many people use the workplace pension for the employer match and a SIPP for additional savings.
- Are SIPP fees always lower than a workplace pension?
- No. Many large workplace schemes negotiate very low fund charges (often well under 0.5% total). Always compare the all-in cost, not just the platform fee.