Personal Pensions Guide
According to the May 2017 Aegon UK Readiness Report, most people would like to retire with £32,270 to spend each year.
When asked the same question a year ago people were reaching for £37,912 on average, which would undoubtedly leave the majority disappointed.
The current figure is still some way above the average UK income of £28,200, and a good deal more than the average pensioner income reported in the ONS’ Pensioners’ Incomes Series, but it’s a positive sign that aspirations are moving in a realistic direction.
Here’s a brief guide to one of the best ways to save and try to achieve your retirement goals – personal pensions.
Saving with a personal pension
- A personal pension is up to you (and possibly a financial adviser) to set up
- The government could top up your payments with tax relief - so it’s an efficient way to save. The value of any tax relief depends on your individual circumstances / the individual circumstances of the investor.
- Other people can also pay in on your behalf - i.e. partners or other family members can help you save for your retirement, or you can pay into one for someone else, for example your children's (age restrictions may apply)
- You can change the amount you pay in and pay lump sums if you want
- If you die before you retire, the value of your plan could be paid as a cash lump sum to your beneficiaries
- Individual pension funds aren’t suitable for everyone. For example, if you have access to a workplace scheme you may be better paying into that
- The value of any tax relief depends on your individual circumstances / the individual circumstances of the investor.
What happens at retirement
When you retire, depending on your type of pension:
- Your pension savings can be used to give you a regular income
- You can take up to 25% as tax-free cash. You then have the choice of taking the rest of your cash as a lump sum too, but this is subject to marginal tax rates. You can find out more about your options at Your Retirement Planner
You should be comfortable with the investment choices that you make as you may lose features, protections, guarantees or other benefits when you transfer. If you’re not sure, you should get financial advice - there may be a charge for this.
Read our workplace pensions guide.
Learn about ISAs – another way to save.