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Workplace Pension
Government bonusFree money from your employer — don't leave it on the table.
Annual limit
Up to 100% of earnings
Annual allowance £60,000 (shared with SIPP)
Government incentive
Tax relief at your marginal rate + employer contributions
Tax on growth
None inside the wrapper
Tax on income
None inside the wrapper
Tax on withdrawal
25% tax-free lump sum; remainder taxed as income
Eligibility
Employed workers aged 22–66 earning above £10,000 (auto-enrolled)
Best for
- ✓Everyone — employer contributions are essentially free money
- ✓Employees who want to sacrifice salary for pension contributions
Key benefits
- ✓Employer matches or contributes on top of your own contributions
- ✓Minimum 3% employer contribution under auto-enrolment rules
- ✓Tax relief on your contributions
- ✓Salary sacrifice reduces your National Insurance too
- ✓No investment decisions needed (default funds available)
Restrictions & watch-outs
- ⚠️Limited investment choice vs a SIPP
- ⚠️Cannot access until minimum pension age
- ⚠️75% of withdrawals taxed as income
- ⚠️Tied to your employer — need to manage pot when changing jobs