Pensions are a good way of saving for your retirement. They are usually long-term plans which attract valuable tax relief and you can contribute on a regular basis, or with a single or sporadic lump sum.
Generally your money will be invested in a fund which ideally should match your risk/reward profile.
Because you get tax relief (which means that the tax-man is adding money to your pension pot ) there are many rules and regulations that have to be complied with.
The most significant regulation is that currently the earliest that you can set your retirement date is aged 55. This means that normally the earliest age at which you can draw your pension is aged 55.
With a personal pension you are allowed to withdraw up to 25% of your total pension fund as a tax free lump sum. The remaining money can be used to purchase an annuity which becomes your pension income. If you decide not to buy an annuity you can elect to move into drawdown which means you have more flexibility regarding drawing money out of your pension. (See budget changes 2014)
Drawdown is a complex scenario and you are advised to take advice from a suitably qualified financial adviser.
Pensions can take many different forms and listed below is a range of the different guises they can take.
It is important to make the right choice with your pension; we recommend that you use a fully qualified financial adviser to help you make the right decision.
The Pension Adviser Network can introduce you to a regulated pension specialist in your area who can help you with your decision.