When looking for the right pension for you it can get a little overwhelming when you realise just how many different options and different types of pensions there are out there. Here are some of the types you could consider:
Personal pensions are provided by banks, building societies, and life insurance companies and they invest your money on your behalf. You can save as much as you want into a personal pension and you will get tax relief on the amount you put in. You can start paying into a personal pension at any time – whether you are employed, self-employed or unemployed. You decide how much money you pay in and it will not affect your entitlement to the basic state pension. However, some pension schemes will have a minimum contribution amount. You can find out more about personal pensions from the Wealthify pension page online.
Stakeholder pensions are also personal pensions, but they have to meet certain government standards designed to make sure they are good value for their customers.
A workplace pension is one arranged through your employer as a way to save for your retirement. An employer will enroll eligible employees into a workplace pension once they pass their probation period. They are required by law to automatically enroll you into a workplace pension scheme unless you are already in a suitable scheme. Most employees who earn over £10,000 a year are eligible. On top of any contributions you make, your employer will also pay in, and the government contributes through tax relief. You can opt-out of the workplace pension if you want to.
If you think you may have a pension or had one in the past but cannot remember the details then you can contact the Pension Tracing Service
Pensions for the self-employed
If you are self-employed then you pay class 2 national insurance contributions which entitle you to the basic state pension, but not the additional state pension. If you want to get more than this when you retire, you can set up a personal or stakeholder pension to receive additional income when you retire.
Pensions for the unemployed
If you are unemployed then you can receive national insurance credits towards your basic state pension which are provided to you if you receive or have received jobseeker’s allowance.
Saving more into your pension
You can save as much as you want into your pension scheme or schemes – there is no limit to the total amount of pension savings you can build up. There are also more flexible rules for claiming tax relief on your pension contributions, but tax charges will apply if you go above certain allowances.
Each year you will receive tax relief on your pension contributions of up to 100% of your UK earnings (this includes your salary and any other earned income). Anything above this will have tax charged on it.
From April 2010, the minimum age from which you can claim your pension increased from 50 to 55 for most people. You may be able to take your pension before 55 in certain circumstances such as if you are unable to work due to poor health.