Pension Calculator vs Retirement Savings Calculator: Plan Your Future
Understand the differences between pension and retirement savings calculations.
Workplace Pension vs Private Pension: Which Is Better?
Most UK employees are automatically enrolled into a workplace pension scheme. But is that enough? And how does a workplace pension compare to a Self-Invested Personal Pension (SIPP)? Understanding the differences — and the valuable tax relief on offer — can meaningfully improve your retirement outcome.
Auto-Enrolment Minimum Contributions (2025/26)
Under auto-enrolment rules, the minimum total contribution is 8% of qualifying earnings. This is split as a minimum of 3% from your employer and 5% from you (the employee). Qualifying earnings are banded — for 2025/26 the lower earnings limit is £6,240 and the upper is £50,270, so contributions apply only to earnings within this range.
Workplace Pension vs SIPP Comparison
| Feature | Workplace Pension | SIPP |
|---|---|---|
| Employer contributions | Yes (min 3%) | No (unless employer pays in) |
| Tax relief method | Net pay or relief at source | Relief at source (basic rate added) |
| Investment choice | Limited fund selection | Wide — stocks, ETFs, bonds, funds |
| Annual allowance (2025/26) | £60,000 | £60,000 (shared limit) |
| Access age | 57 from 2028 | 57 from 2028 |
| Best for | Maximising employer contributions | Self-employed / extra saving |
Tax Relief: Net Pay vs Relief at Source
Under the net pay arrangement, contributions are taken from your gross salary before tax — you get full relief at your marginal rate automatically. Under relief at source, you contribute from your net pay and HMRC adds basic rate tax relief (20%) to your pot. Higher and additional rate taxpayers must claim the extra relief via self-assessment.
The strategy: always contribute at least enough to get your full employer match — this is essentially a guaranteed 60% instant return (3% employer on top of your 5%). Then consider a SIPP for greater investment flexibility.