Personal Pensions

perosnal pensions

Personal Pensions:
At a Glance

In most cases Personal Pensions are a defined contribution pension schemes where contributions made by you and/or your employer are invested in funds.

  • You can have a personal pension if you're employed, self-employed or not working
  • Other people, including your employer, can contribute to your pension
  • You can have more than one personal pension, though there are limits for tax relief (Currently £40,000 p.a)

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  • How it Works?
  • Retirement Benefits

How a Personal Pension Works

As there are no restrictions on the number of personal pensions you can belong to, they can provide additional retirement benefits to run alongside your workplace pension scheme. When choosing a personal pension, we always advise clients to carefully consider the flexibility of pension package, so that your contributions can remain the same regardless of whether you change jobs or stop working.

There are a wide range of choices out there and it is often difficult to clearly understand which pension will best suit your requirements. Again the watch word is “flexibility”. All contributions you make are invested and there is a huge choice of investment funds. We offer advice that puts in clear terms the risk profile of funds when weighed against the anticipated levels of return.

Risk Strategy

While a higher risk strategy can yield a higher return, it’s important to remember that funds go down as well as up, and in many cases clients prefer a lower risk strategy that provides smaller returns but more security for their hard-earned money. Talk to us today about how we can help you find the right pension strategy.

Retirement Benefits

Several factors decide the value of your pension benefits:

  • The amount of contributions that have been made
  • The period that the contribution has been invested
  • The investment growth over this period
  • The level of charges

Recent changes in legislation mean that, in most cases, pension benefits can start to be drawn from the age of 55, whether you are still working or not. At this point 25% of your pension pot can also be withdrawn as a tax-free lump sum. Your financial circumstances will dictate whether it is sensible to withdraw 25% of your pension pot and we recommend talking to a financial advisor to get a clear idea of the pros and cons of doing this.

Providing a Regular Income

There are different ways in which you can use your pension pot to provide a regular income, such as taking out an annuity, an income drawdown, or a combination. It is important to understand that the amount of income depends on the type of pension, and we advise clients on the options that suit their requirements.