What Is a Personal Pension?
A Personal Pension is a tax-efficient savings scheme used to build an income in retirement. You can usually invest up to 100% of your income up to the £40,000 pension annual allowance, so if you earn £35,000 this tax year, you can put it all into your pension. Please refer the section below in connection with the tax relief that is available on personal contributions.
There is also a lifetime allowance for pensions, which is currently £1 million. This is the maximum amount that can be held in your pensions at retirement.
Recent changes to pensions give greater freedom and flexibility to those with a private pension. On reaching retirement age, you will be able to withdraw your entire pension in a lump sum or take an income over time.
Importantly, the age at which you can cash in your pension is currently 55, this will rise to 57 in 2028. This will then track 10 years below the state pension age, which rises with life expectancy over time. It’s vital that you understand the age at which you will be able to access your pension when setting your retirement goal.