We believe in helping our workers plan for the future, so we did some research into private pensions and their popularity in the UK. It turns out that private pension participation in the UK has seen a sizeable rise. Between April 2018 and March 2020, 57% of people below the State Pension age were actively saving for retirement, compared to just 43% before automatic enrolment was introduced in 2012.
Among employees, workplace pension participation hit 79% in 2021, while the private sector saw a sharp increase from 32% to 75% over the same period. Self-employed workers, however, still lag behind, with only 50.2% making pension contributions. The statistics showed us the need for better pension planning, particularly for contractors, who can benefit from flexible pension solutions like SIPPs, so we decided to team up with Which? recommended SIPP provider Interactive Investor.
They will help us offer our employees the option to make Gross Employer Contributions into the ii Self-Invested Pension Plan (SIPP).
What is a SIPP?
A Self-Invested Personal Pension (SIPP) is a UK-based retirement savings account that offers flexibility and control over investment choices. Unlike traditional pensions, SIPPs allow individuals to invest in a wide range of assets, including stocks, bonds, funds, and property. They provide tax relief on contributions and tax advantages on investment growth.
SIPPs are ideal for those comfortable with making their own investment decisions and looking for potentially higher returns. Accessible from age 55 (rising to 57 in 2028), 25% of the fund can be taken as a tax-free lump sum. SIPPs can be set up by anyone over 18 who is a UK resident. They offer the potential for tailored retirement planning with the option to consolidate various pensions into one account.
Workplace Pension vs SIPP
A workplace pension is arranged by your employer, offering either defined contribution (money purchase) or defined benefit schemes. Defined contribution pensions depend on contributions from you, your employer, and government tax relief, while defined benefit pensions provide a guaranteed payout based on your salary and years of service.
A SIPP (Self-Invested Personal Pension) offers more investment freedom and can complement a workplace pension by allowing additional contributions. Employers can contribute to your SIPP, and you can transfer workplace pensions into a SIPP for easier management and broader investment options.
Is it worthwhile to contribute to a SIPP?
A Self-Invested Personal Pension (SIPP) offers significant benefits, such as a wide range of investment choices, including shares, funds, bonds, and commercial property. SIPPs provide tax advantages, like tax relief on contributions and tax-free investment growth. They can enhance retirement income by consolidating multiple pensions, potentially lowering management costs.
SIPPs offer flexibility in managing and withdrawing funds upon retirement. However, due to associated charges and complexity, they require active management and may not suit everyone. Seeking professional financial advice is recommended to maximise benefits.
Introducing the ii SIPP
Interactive Investor is a flat-fee SIPP provider and the second-largest investment platform in the UK by assets under administration. With the ii SIPP, you will pay a simple, flat fee. Most other pension providers charge percentage fees that grow with your pension. You can also use the ii SIPP to bring together other pensions so you can manage everything in one place via their website or user-friendly app.
Please click here for more information on the ii SIPP, instructions on making Gross Employer Contributions, and an illustration of the associated tax savings.
Alternatively, if you have any questions, you can reach out directly to the ii welcome team via email or phone, who will happily assist you:
Email: welcometeam@ii.co.uk
Phone: 0345 646 2390
ii SIPP Through SmartWork
All SmartWork employees can set up Gross Employer Contribution into the ii SIPP in a few easy steps – so they can keep more of what they make. When signing up for a contribution arrangement with SmartWork, you agree to allocate part of your assignment rate to pension contributions. Therefore, your contributions will be deducted from the overall contract income, and as a result, you will pay less PAYE tax & less employee NI. SmartWork will also pass on any employer NI savings.
If you are a SmartWork contractor, please contact your business manager to learn more about SIPP contributions. If you are not yet with us and looking for an experienced FCSA Accredited umbrella provider with a five-star track record, please email info@smartwork.com or call 0800 434 6446.
It is important to understand that the use of Gross Employer Contributions or the ii SIPP is not a recommendation and that the ii SIPP is not an Employer, Workplace or Auto Enrolment Pension. The ii SIPP is a Personal arrangement between you and Interactive Investor, and you are solely responsible for agreeing & monitoring contributions made by your employer.
The value of investments made within a SIPP can fall as well as rise and you may end up with a fund at retirement that’s worth less than you invested. You can normally only access the money from age 55 (age 57 from 2028). The ii SIPP is intended for customers who have sufficient knowledge and experience of investing to make their own investment decisions.
It is important to note that when you come to take income from a pension, it is treated as taxable income, and you will pay tax at the applicable marginal rate. This communication is not intended to be a personal recommendation. If you are unsure about the suitability of a SIPP or transferring any existing pension plan(s) into a SIPP, you should seek advice from an authorised financial advisor. Tax treatment depends on your individual circumstances and may be subject to change in the future.
