Auto-enrolment: your options

The main differences between auto-enrolment and a private pension are the control and flexibility you have with a private pension.

While AE is simple and happens automatically, a private pension gives you flexibility to change and pause contributions, to choose funds which match your investment goals and to tailor your retirement options to meet your needs.

Since everyone’s financial, health and family circumstances are different having this flexibility and control can often be very important.

For anyone looking to contribute more than 1.5%, regardless of your income tax rate, considering a private or workplace pension is a smart choice, for the following reasons:

• Tailored and flexible to your specific goals.

• Adjustable contribution rates

• Additional voluntary contributions possible

• Flexible Contribution options for the employer

• Broad fund options

• Regulated financial advice

•  Income tax relief on contributions

• On-going management from pension provider

• Additional charges may be applicable

Auto-Enrolment

For those in the 20% tax rate bracket who are only looking to contribute 1.5% from salary (matched by their employer) auto-enrolment is:

• Automatic
• Entry-level
• Fixed contribution rates
• Voluntary contributions
• And has lower charges

However, it’s worth noting there is:

• Limited investment choice and not tailored to your specific goals
• No income tax relief on contributions
• No personal advice based on changing circumstances

Simply click on our calculator or talk to your advisor to find out - Auto-Enrolment Calculator

Because retirement planning is highly individual, the amount you need to save can depend. Private pensions allow contribution rates to be tailored to factors such as your age, your retirement goals, years until retirement or how much you can afford. They also allow additional voluntary contributions, where you can boost savings as you go.

Pensions by their nature provide income tax benefits for both lower and higher rate taxpayers. When it comes to looking at private pension options to suit your needs, it is important to note you may be able to claim income tax relief on your contributions if you are eligible.

Access to a wide range of investment funds means you have more choice in terms of diversifying, or taking greater risks with, your pension.

Regulated financial advice as well as retirement and customer support are widely available for private pensions. These are useful when planning for the future or responding to changes in circumstances that will affect how your pension changes.

Employers may offer a private pension scheme to their employees to contribute above the statutory minimums, provide additional benefits and encourage higher savings closer to retirement.

A range of retirement income options, including lump sums and flexible drawdown arrangements that go beyond what the state can offer.

Choosing a pension is a highly personal choice that you might not want to make alone.