Workplace pensions, personal pensions and SIPPs: what is the difference?
A plain-English guide to the main types of UK pension and how they differ in who pays in, who chooses the investments, and what they cost.
By Rainsbridge
1 min read
For information only. This is not financial advice or a personal recommendation.
Most people in the UK will have more than one pension during their working life. Knowing which type you have makes it easier to keep track of them.
Workplace pensions
Most employers must automatically enrol eligible employees into a workplace pension. You pay in, your employer pays in, and you usually receive tax relief on your own contributions. Your employer chooses the provider, and there is normally a default investment fund if you do not pick one.
Personal pensions
A personal pension is one you set up yourself with a provider. It is useful if you are self-employed or want a pension separate from your employer. You choose the provider, and usually from a range of funds.
SIPPs
A self-invested personal pension (SIPP) is a type of personal pension that offers a much wider choice of investments. It gives you more control, but also more responsibility for your decisions.
The State Pension
Separate from all of these, the State Pension is paid by the government based on your National Insurance record. You can check your State Pension forecast on GOV.UK.
A note on combining pensions
Bringing old pensions together can make them easier to manage, but it is not always the right choice. Some older pensions have valuable guarantees or benefits you could lose by moving. Check carefully, and consider taking regulated advice before you transfer.
