Auto-enrolment: your options

Auto-enrolment is convenient for many, but private pensions are the gold standard option for anyone wishing to have a bit more control over their pension. While higher earners are more likely to have started a private pension already, anyone who wants to save well for their future can start one now.

The main difference between the state pension at retirement and a private pension is how much control you have over what you put in and take out. You may see differences in the levels of fund choice you have which can affect potential savings upon retirement.

This control is balanced against risk, charges and investment choices, meaning there is no one-size-fits-all solution.

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,
• Has fixed contribution rates,
• Has no 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,
• And no personal advice based on changing circumstances.

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

• Tailored and flexible to your specific goals.
• Adjustable contribution rates
• Additional voluntary contributions possible
• Broad fund options
• Regulated financial advice
• Income tax relief on contributions
• On-going management from pension provider

However, there are additional charges for administration.