Personal Pensions

What is a Personal Pension?

A personal pension is a long-term saving product which is specifically designed to  help you build up a pot of money to use to provide an income for yourself when you retire.  You won’t be able to take your money until you retire. 

Who can take out a Personal Pension Plan?

Personal pensions are designed for people who don’t have a pension scheme through work and who want to contribute themselves.  So if you are self-employed or your employer doesn’t offer a pension then it should be suitable for you. 

How does it work?

You invest money either regularly or make one off payments as and when you want.  The money that you contribute into a pension plan is usually subject to tax relief up to certain limits.

This money is invested in funds, which you can choose based on your retirement goals and your attitude to risk.  The aim is to grow your pension money over time, however you need to be aware that, regardless of which funds you choose, the value of your pension money can go down as well as up.

The benefits that you get once you retire will depend on how much money you have paid in and the return that’s been achieved following investment. 

What happens when you retire?

You can choose to take benefits from a personal pension at a retirement date of your choice between 60 and 75.  If you are seriously ill you may be able to take benefits earlier than this.

There’s different options of how you can take your money on retirement including a tax-free cash sum, a taxable cash sum, a regular income for the rest of your life (known as an annuity), or, you can further invest your money is a post retirement investment product called an Approved Retirement Fund (ARF) or an Approved Minimum Retirement Fund (AMRF).

Depending on your circumstances you may take a mixture of all of these options.

There are lots of rules about how these different options work including minimum and maximum amounts and tax implications.  When you are ready to think about your retirement options then your Financial Broker will be able to help you make sense of what the right option for you is based on your individual circumstances, or, you can take a look at the At Retirement section which gives you more information. 

Important information about tax

Where we’ve mentioned tax, what we say is based on our understanding of current law and tax practice. These could change in the future and along with any changes in your personal circumstances could affect how much your plan is worth and your tax liability.  

Where can I find out more information?

For information on how much you may need to live the retirement you want you can visit our Mind the Gap page.

Other resources available for you are:

  • Pensions Made Simple Guide
  • Investment Options Guide

Or, you can speak to your Financial Broker. 

WARNING: The value of your investment may go down as well as up. 

WARNING: If you invest in this product you may lose some or all of the money you invest. 
WARNING: If you invest in this product you will not have access to your money before you retire

WARNING: These products may be affected by changes in currency exchange rates.

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