What is a personal pension?

Retirement planning

Personal pensions are a means of building up a pot of money to then use to provide you with a regular income in your retirement.  You can contribute a regular amount, or a lump sum, to a pension provider, investing your pension fund in many different ways all around the world dependent on your attitude to investment risk.

Would a personal pension be good for you?

Your decision will largely depend on how much you can afford to save for your pension and how much you will receive from other pension schemes you already have.

Personal pensions may be suitable for:

  • People who are self-employed
  • Employees whose employer does not offer a company pension scheme
  • Employees who have the option to pay into a company scheme but choose not to
  • Employees on a moderate income who wish to top up the money they would get from a company pension

A personal pension may not be the best choice if:

  • Your employer offers a company pension scheme
  • Your employer offers access to a stakeholder pension scheme with an employer contribution

Paying your personal pension

For every £1 you save, the government will add 25p to the pension pot.

For higher rate tax payers, full marginal tax relief is then available for contributions up to £50,000 per annum.