Life of a personal pension
- You decide you would like to save for retirement with a personal pension.
There are many options on offer, so it's a good idea to do some research first. Your pension is important, so get expert help before making your decisions.
- You choose a provider, a type of pension, the age you would like to retire at and payment levels.
- You begin making payments.
These payments, up to 100 per cent of your relevant UK earnings, will receive tax relief, normally at your highest rate.
Tax relief may be altered and the value to the investor depends on their financial circumstances.
- If your circumstances change, you should review your pension arrangements.
- If your income goes up, you may be able to pay more into your pension
- If you want to leave your pension provider, you may be able to transfer your fund to someone else. However, the transfer value of your fund may be less than the amount you have paid in
- If you want to change the funds your payments are invested in, you may be able to switch funds - there may be a charge and restrictions.
- You retire at your selected pension age.
The minimum retirement age is 50, but this will increase to 55 from April 2010. Now you can choose how to take your benefits, such as
- using your whole pension fund to provide an income, or
- taking a tax-free lump sum and using the rest to provide a smaller income.
Your pension income will be taxed as earned income.
- You begin taking your income.
The income your fund provides normally comes from an annuity (however, there are other options). You buy this with your pension fund after taking any tax-free lump sum. Most pension providers offer a range of annuities. Many of these have options to make sure they suit you and your family.
References to legislation and taxation are based on Standard Life's current understanding of law and HM Revenue & Customs practice at date of publication. Legislation and taxation are likely to change in the future.
See your options in Saving for Retirement
