Personal
Personal Pension Plans
Designed to offer a lump sum and income in retirement, a personal pension is available to any United Kingdom resident who is under 75 years of age. When you contribute to a Personal Pension plan, your money is invested and a fund is built up. The amount of pension payable on retirement depends upon:
- the amount of money you paid into the scheme;
- the performance of the investment fund
- charges payable under the plan
- the 'annuity rate' at the date of retirement. The annuity rate is the factor used to convert the pension fund into a pension.
Currently a Personal Pension scheme member can retire at any age between 55 and 77*. At retirement, you may normally take up to 25% of the value of your fund as a tax-free lump sum, with the balance commonly being used to buy an annuity.
*The budget of 22 June 2010 stated that the maximum age for drawing retirement benefits from a private pension scheme was to be withdrawn, with new rules applying from 6 April 2011. Until then, transitional rules mean that members of defined contributions pension schemes (ie money purchase, personal and stakeholder schemes), who have not yet purchased an annuity and reach 75 on or after 22 June 2010, will have until age 77 to do this. These rules will cover the period up to 6 April 2011. For more information click here to download HMRC's full announcement.
A pension is a long term investment. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.
Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor.
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