Pensions explained
A personal pension is simply a way of saving money for your future retirement.
Pensions have one very important feature - they are incentivised by the taxman. In fact, the taxman is very generous when it comes to personal pensions, adding to your pension 'pot' every time you do:
Every £80 you pay in is topped up to £100, giving your savings an immediate boost of 25%.
Higher rate taxpayers can get even more.
On top of this, the money grows virtually tax free over the years*.
Remember
- Your money is tied up until you take your benefits at aged 50 or more. The minimum age goes up to age 55 from 2010.
- The amount of pension income provided by your retirement fund will depend on a number of factors, including investment return and annuity rates when you retire.
- Future governments may increase or decrease the amount of tax relief you get.
* Apart from any tax on dividend income from UK shares, which we can't reclaim.
