A personal pension is usually arranged by yourself, not your employer.
A personal pension or private pension is a tax-efficient savings plan that enables you to save for retirement. Your pension contributions attract tax relief and can be made in various ways, either regularly or by lump sum, or a combination of both.
On retirement, up to 25% of your pension fund value can be taken as a tax-free cash lump sum. The remainder of the funds left in your pension pot can be used to take an income, either by way of an annuity, or by taking cash directly from your pension fund (drawdown).
Read more about annuities: Guide: How to choose the best annuity Guide: What are enhanced annuities?
Most pension contributions are invested in the financial markets on your behalf by a specialist organisation in order to get the best return for your future. The income your pension provides you in retirement will vary from provider to provider and will depend on the investment choices you make, the performance of the pension funds, the level of contributions you make and the charges applied by the provider.
Planning for retirement has never been so important. Whether you're reviewing a pension or looking for the best annuity rates, compare the market to get a good comparison rather than opting for the first retirement advice you receive.
Remember: each pension company will vary in both charges and investment performance.
Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.
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