What is a pension?

A pension is a long-term, tax-efficient savings method that helps you set money aside for later life and retirement. The money you amass can be used as an income when you retire.

There are a number of pension types available, including state pensions, personal pensions and auto-enrolment workplace schemes.

What is a State Pension?

Once you reach State Pension age, you’ll be able to access your State Pension, a regular payment paid to you by the Government. To be eligible, you’ll need to have paid or been credited with a minimum level of qualifying National Insurance contributions.

What is a Personal Pension?

With a personal pension, you can pay in cash as often you like. The amount contributed is invested with the aim of growing the funds by the time you retire.

Currently, you can invest up to £40,000 tax-free each year, however this does depend on your earnings. You can withdraw your funds once you reach 55.

What is Auto-Enrolment?

Auto-enrolment is a workplace pension organised through your employer. You’ll pay in a portion of your wage, while your employer and the Government will also contribute. Currently, the minimum contribution is 2%, made up of a 0.8% from you, 1% from your employer and 0.2% from the Government. This is set to increase as of April 6th 2018.

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