Quick answer: Use both. Take your workplace pension up to the full employer match first — that's free money no SIPP can match. Then use a SIPP for additional contributions to get wider investment choice and often lower fees. Salary sacrifice (workplace only) adds an NI saving on top.
Why the employer match comes first
A 5% employer match on a £40,000 salary turns your £2,000 into £4,500–£5,333 once you add the match and tax relief — a 125–167% instant return. Put the same £2,000 in a SIPP and you only get the tax relief, not the match.
Comparison
| Workplace | SIPP | |
|---|---|---|
| Employer contributions | ✓ | ✗ |
| Salary sacrifice (NI saving) | Often | Rare |
| Investment choice | 20–100 funds | Thousands |
Salary sacrifice — workplace's edge
Sacrificed salary escapes income tax AND employee NI (8%/2%), and many employers pass back their 15% NI saving too. Total saving can exceed 50% — SIPPs can't usually do this.
The hybrid strategy
- Workplace to the full match
- If salary sacrifice is available, keep adding there for the NI saving
- Otherwise add to a SIPP for choice and lower fees
- On changing jobs, consolidate the old workplace pot into your SIPP
Frequently asked questions
Workplace pension wins for the employer match — that's free money plus tax relief. SIPP wins for flexibility and choice. Most savers benefit from using both: workplace pension up to the match, SIPP for additional contributions.
Yes. Most working adults use a workplace pension for the employer match, then make additional contributions to a SIPP for wider investment choice. The £60k annual allowance is shared across all your pensions.
Don't transfer your active workplace pension — you'd lose employer contributions. Once you leave that employer, you can transfer the workplace pension to a SIPP or to your new employer's scheme.
Sometimes. Modern low-cost SIPPs (Vanguard 0.15%) can be cheaper than older workplace pensions. But many modern workplace schemes (especially with salary sacrifice) are very competitive — and the employer absorbs admin costs.
Only if your employer offers it — most don't. Salary sacrifice is much more common with workplace pensions because the employer manages payroll. Some employers will sacrifice to a chosen SIPP, but it's the exception.