What are Personal Pensions?
A Personal pension is your own private pension that you can take from job to job. It is ideal if you don't have access to a company scheme or are self-employed. It is a type of Money Purchase pension.
Essentially this means that you pay money into your plan and choose where to invest it from a range of funds. These are managed on your behalf. The pension pot is usually used to buy and income and/or take cash (including 25% tax free) when you retire.
The final value of your pension pot at retirement will depend on several factors including how much you've contributed, the investment performance, and fund charges. As your money is invested, the value of the fund can go down as well as up so you may not get back what you put in.
Personal pensions also benefit from tax relief, within certain limits, meaning that more of what you earn will go towards your retirement savings.
You may have a Group Personal Pension, which is a type of personal pension but provided through your employer.
Things to consider
There are many things to think about when deciding whether to contribute to this type of pension.
It might be right for you if;
- You're self-employed.
- You're not working but can afford to pay into a pension.
- You're employed but your employer doesn't offer a company pension.
It might not be right if;
- Your employer offers access to a Company pension scheme. If they do, you should seriously consider joining it.
- Your employer offer access to a Stakeholder pension scheme, which it contributes to.
Deciding on whether a Personal pension is right for you depends on your individual circumstances and so speak to a financial adviser for more information. Please note that Prudential currently do not offer a Personal pension scheme for new applicants.
This is based on our understanding 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.
Why do I need a pension?
A pension is designed to help you fund your retirement and replace the income you are no longer receiving from working.
Tax benefits of saving in a pension
Saving in a pension is a tax-efficient way of building up an income for retirement.
What are Individual Pensions?
There are three main types of individual pensions - personal pensions, stakeholder pensions and self-invested personal pensions.
What are Stakeholder Pensions?
Stakeholder pensions are flexible and are designed to help if you are only able to save smaller amounts towards funding your retirement.