There are now many forms of savings vehicles offered by workplace pension providers.
Following on from last week’s deep dive on which provider’s offer a Lifetime ISA, todays insight looks at General Investment Accounts, what products providers offer and how members can make contributions.
Typically most popular with savers who have already used their annual ISA allowance, General Investment Accounts (GIA) are another form of tax wrapper.
Like a Stocks & Shares (Investment) ISA, with a GIA the money saved into the account is invested rather than held in cash.
As savers need to be prepared for the value of the investment to fall as well as rise, they tend to be best suited to savers looking to put money aside for the longer-term. As there are no tax benefits with this product, there are also no contribution limits, meaning savers can add as much as they wish.
Like all investments outside of a saver’s annual ISA allowance, any capital gains or dividends are taxable.
Saver’s will start to pay capital gains tax after earning £12,300 in gains and will start paying dividend tax after earning £2,000 in dividends.
The percentage of tax paid beyond these thresholds depends on the amount of total taxable income earnt by the saver.
Our data shows that GIAs are one of the most common forms of savings vehicle offered by workplace pension providers. Currently only Aviva Designer and Royal London do not currently offer members the option of setting up a GIA alongside their pension offering.
Most providers offer their own GIA solution. However its hardly surprising to see that Mercer Master Trust Aviva offers a solution by Aviva, Mercer Master Trust Scottish Widows offers a GIA from Scottish Widows. Standard Life use the GIAs from Cushon, as like they do with their ISA proposition.
When it comes to contributions, most providers allow contributions to be made at source via a payroll deduction. Only Legal & General and True Potential do not allow this currently.
All providers who offer a GIA allow the member to make additional payments when wanted, most commonly via their member app or portal.
Currently no provider offers their member the option of saving into a GIA using less traditional savings methods, such as via rounding up or sweeping of surplus income from a selected or linked bank account, however Standard Life are using some algorithm-based prediction savings techniques.
We were pleased to see that half of the workplace pension providers in our research who offer GIA accounts allow contributions or additional payments to be made by the employer into the GIA.
Aegon Master Trust
Aegon Workplace ARC
Aviva My Money
Aviva My Money Master Trust
Fidelity Master Trust
Legal & General
Legal & General Master Trust
Mercer Master Trust Aviva
Mercer Master Trust Scottish Widows
Scottish Widows GSIPP
Scottish Widows Master Trust
Standard Life DC Master Trust
Most providers also offer the option for members to apply a contribution holiday to their GIA savings. As highlighted last week, this means the member can stop/pause savings during times of difficulty or in months with abnormally high spending. This is a very welcomed feature and potentially never needed more so now as we are all feeling the pinch of the cost-of-living crisis. The providers who do not currently offer this feature are Mercer Master Trust and Scottish Widows.
Over the course of the next week we will take closer looks at what over savings vehicles providers are offering along with their workplace pension – this will include Cash and Investment ISAs and cash deposit accounts.