Personal pension

What is a personal pension?
A personal pension is a tax efficient savings plan that lets you build up a pension fund to use when you retire. If you're not a member of a company pension scheme and want the discipline of saving regularly, a personal pension could be right for you.

Even if you're already a member of a company scheme, you can still use a personal pension to top up your benefits.

Personal pensions enjoy a number of key tax advantages over other types of savings including:

• Tax relief on your contributions
• Tax efficient growth in your pension fund
• The ability to take part of your pension benefit as tax free cash

Key points about personal pension

• Flexible contributions- personal pensions can accept monthly, annual and single contributions. They can accept transfers from other pension funds and can even take regular contributions from your employer
• Wide investment choice- personal pensions usually offer wide choice when it comes to investing your money. You can opt for specialist funds, managed funds or go for a combination of different funds
• Options on retirement- you can choose how you want to take your pension - and you can shop around to see who's offering the best annuity rates

Who is it for?

A personal pension could be suitable for you if:

• You are employed or self employed
• You receive yearly bonuses and want to invest them for your future
• Your employer is going to make a contribution to your pension
• You're looking for a wide range of investment opportunities

Need help deciding?
A chat with one of our financial planning advisers is without obligation. Call us to make an appointment.
0845 301 9945

• How it works

Provided you are under age 75, you can start a personal pension whenever you want.

Starting your plan

• Decide how much you need to save- you can save up to 100% of your earnings in a personal pension, subject to a maximum of £255,000 (2010/11).
• If you receive regular bonuses- you might also want to consider single premium plans, they generally have lower charges
• Will your employer contribute?- it may be worth asking.
• Decide how your money is invested- personal pensions normally give you a wide choice of funds investing in equities, fixed interest, property and cash.

Building your fund
The contributions you save benefit from the growth and tax efficiency of the investment fund or funds you have chosen.

If you have been a member of a pension scheme, you can normally transfer the value of your pension scheme benefits to your personal pension.

When you retire
You can take your pension benefits whenever you want between age 55 and 75. You can choose how your benefits are paid

• Tax free lump sum- up to 25% of your pension fund can be taken this way
• Pension- you could opt for a level pension, one that increases every year or one that continues to be paid to your spouse or civil partner if you die. Your pension benefits will be taxed as income.

Need help deciding?
A chat with one of our financial planning advisers is without obligation. Call us to make an appointment. 0845 301 9945

• Benefits of a personal pension

A personal pension is one of the most flexible, tax efficient ways of saving for your retirement.

Tax benefits

• Tax relief on the contributions you make, the amount of tax relief depends on how much you earn
• Contributions grow in a tax efficient fund
• Take up to 25% of your accumulated pension fund as a tax free lump sum

Contribution benefit

• Monthly or annual contributions
• Make lump sum contributions to your personal pension whenever you like
• Your employer can make a contribution and your plan may be able to accept transfers from other pension schemes
• You can contribute up to 100% of your earnings each year (maximum £255,000 2010/11)

Other benefits

• Change, stop and restart your contributions whenever you want
• Even if you don’t have any earnings, you can still get tax relief on contributions of up to £3,600 a year with a personal pension
• Access to a wide range of investment funds – you can switch between funds if you want
• If you want, you can transfer your personal pension fund to another pension scheme anytime before you retire

Need help deciding?
A chat with one of our financial planning advisers is without obligation. Call us to make an appointment.
0845 301 9945

• Common questions about personal pensions

How much can I pay into a personal pension each year?
Can I transfer other pensions into a personal pension?
How do I claim higher rate tax relief on my contributions?
When can I start taking my personal pension benefits?
What happens if I die before I retire?

How much can I pay into a personal pension each year?
You can pay up to 100% of your earnings. Your employer can also pay into your personal pension.

The total amount paid in is subject to a limit (called the Annual Allowance) of £255,000 for the 2010/11 tax year.

Can I transfer other pensions into a personal pension?
Yes, most personal pensions will accept transfers from other personal pensions or company schemes.

How do I claim higher rate tax relief on my contributions?
You have to claim any higher rate tax relief through your annual self-assessment tax return. Your accountant or tax adviser can help you with this.

When can I start taking my personal pension benefits?
You can start taking your benefits from age 55. Under certain circumstances, if you cannot work due to ill health, you may be able to take your benefits earlier than this.

What happens if I die before I retire?
With most modern pension plans, the value of your pension fund will normally be returned to your dependants if you die before you retire.