What is a personal pension?

I have a pension but I’m not really sure what it is, please can you explain?

Question asked by Julian Hollis
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Answered by Neil Adams

A pension is essentially a long-term savings plan designed to help you set aside money for later life. You usually make monthly contributions into a pension, either provided by your employer, or a standalone pension plan if you are self-employed, and you’ll receive tax relief on your contributions.

If you  belong to your company scheme, your employer will make contributions on your behalf too. Your pension savings are then invested in funds, for example, in the stock market. You should always monitor these investments, and you may be able to move your money into different funds within the pension if you want to.

When can I access my personal pension fund?

You won’t be able to access the money in your pension until you reach the age of 55. At this point, or whenever you want to after this age, you can usually take up to 25% of your pension as a tax-free lump sum. You can then use the remainder to provide you with an income, or you can make withdrawals as and when you need them.

It’s a good idea to seek professional financial advice about your pension decisions, to ensure your money works as hard as possible for you. If you would like some help please feel free to contact us and one of our pension advisers would be glad to help.

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This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
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Victoria
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