Comparison · 2025/26
Workplace Pension vs Personal Pension
A workplace pension comes with employer money attached. A personal pension gives you control, choice and the option of using a SIPP. For most UK workers the answer is both — here\'s how to split contributions.
Side-by-Side
| Feature | Workplace Pension | Personal Pension |
|---|---|---|
| Employer contribution | Yes — minimum 3% qualifying earnings | No (unless employer agrees) |
| Tax relief | 20–45% (RAS or net-pay) | 20–45% via RAS + self-assessment |
| Annual allowance | £60,000 (combined) | £60,000 (combined) |
| Fund choice | Limited (10–30 funds typical) | Wide — SIPP allows shares, ETFs, funds |
| Fees (default fund) | 0.30–0.75% capped | 0.15–1.0% |
| Salary sacrifice | Usually available | Rarely available |
| Access age | 57 (from 2028) | 57 (from 2028) |
| Tax-free cash | 25% (capped at £268,275 LSA) | 25% (same LSA) |
| Portability | Resets each employer | Stays with you |
Worked Example: £35,000 salary, basic-rate saver
- Auto-enrolment minimum on qualifying earnings (£35,000 − £6,240 = £28,760):
- Employee 5% = £1,438/yr (£1,150 net cost after 20% relief)
- Employer 3% = £863/yr free
- Total into pot: £2,301/yr for £1,150 out of pocket — effective 100% uplift
- If you redirected that £1,150 into a personal pension instead: £1,438 gross after relief — same growth, no £863 employer contribution. Net loss: £863/yr.
The employer match is the single largest free uplift in UK personal finance. Capture it first, then add a personal pension or SIPP for extra savings or fund choice.
Decision Framework
Prioritise your workplace pension if:
- You haven\'t maxed the employer match yet
- Your scheme offers salary sacrifice (NI saving on top of relief)
- You\'re happy with the default fund and the charge cap
Add a personal pension if:
- You\'ve maxed the employer match and want more retirement saving
- You want investment choice (specific ETFs, individual shares via SIPP)
- You\'re self-employed or between jobs with no scheme
FAQs
Should I opt out of my workplace pension to use a personal one?
Almost never. Opting out means losing your employer's contribution — typically 3% of qualifying earnings under auto-enrolment, and often more. That is free money. You can hold a personal pension alongside the workplace scheme rather than instead of it.
What is the minimum auto-enrolment contribution?
For 2025/26 the statutory minimum is 8% of qualifying earnings (those between £6,240 and £50,270): 5% from the employee (including 1% tax relief) and 3% from the employer. Many employers contribute more — check your scheme.
Can I transfer a workplace pension to a personal pension?
Yes, most defined-contribution workplace schemes can be transferred to a personal pension or SIPP, often when you leave the employer. Transferring while still employed loses future employer contributions to that pot. Defined-benefit transfers above £30,000 require regulated advice.
Which has lower fees?
Workplace schemes are capped at 0.75% AMC for the default fund under the charge cap, and large employers often negotiate 0.30–0.50%. Personal pensions and SIPPs range from 0.15% (passive platforms) to 1%+ for advised products. For the default fund a workplace scheme is usually cheaper.
Do both get the same tax relief?
Yes — 20% basic-rate relief at source, with higher- and additional-rate relief claimed via self-assessment. Salary-sacrifice workplace schemes additionally save employee and employer National Insurance, which can boost the effective relief by another 8–15%.
Calculators & Guides
Calculators for this topic
ISA Calculator
Project ISA savings growth over time with the UK £20,000 annual allowance.
Salary Sacrifice Calculator
Calculate how much tax and National Insurance you save by making salary sacrifice contributions to a pension, cycle to work scheme or EV car scheme.
Take-Home Pay Calculator
Calculate your net salary after income tax, National Insurance and student loan deductions.
Compound Interest Calculator
Calculate compound interest on savings and investments over any time period.
Disclaimer: Information only — not financial advice. Pension rules and tax treatment can change.