Money Purchase Plan

This pension plan is set up by your employer to help you save for retirement in a tax-efficient way.

Depending on the scheme rules you and your employer can make payments into the plan.

Payments can be invested in a range of assets and your fund can be used to buy an annuity and/or take tax free cash at the company retirement date.

Why save in a Money Purchase Plan?

• Flexibility - subject to the scheme rules you can make one-off payments to top up your account, and change your regular payments at any time without penalty. Note that charges will continue to be deducted. You can also transfer your plan to another arrangement before you start taking your pension. This can be a complicated decision and therefore you should consider taking financial advice.
• Employer contributions - depending on the scheme both you and your employer can contribute to your plan - potentially boosting your retirement income. See the benefits of employer contributions.

Take action

• Read about the key features
• To start or ask about our Money Purchase Plan, including your fund options, speak with your employer
• For more general guidance, see our pension guide
• Tax benefits* - saving in a pension is tax efficient. As contributions are taken from your salary you'll receive immediate tax relief on the money you pay into your pension. Subject to HMRC limits, for every £100 you invest into your pension this will only cost you £80 (as a basic rate taxpayer) as the remaining £20 that you would normally pay to the taxman will be paid into your account instead. This will be higher if you are a higher/additional rate tax payer. You are also allowed to take up to 25% of your fund as tax-free cash when you retire. See our tax relief calculator or read about the tax benefits of saving in a pension. Note that pensions in payment are taxed as earned income.

• Invested in a range of funds - trustees of the plan make available a range of funds from which you can choose The range includes unit-linked funds from leading fund managers, as well as the Prudential With-Profits Fund. Bear in mind that the value of your investment may go down as well as up and you may not get back your original investment.

*This is based on our understanding, as at February 2011, of current taxation, legislation and HM Revenue & Customs practice, all of which is liable to change without notice. The impact of taxation (and any tax relief) depends on individual circumstances.