What are Pensions?

A pension is a saving scheme that you, and sometimes your employer, can pay into. You can claim tax relief on the contributions, i.e. the pension payments are made from your salary before you pay income tax and pensions are a way of saving up for your retirement.

At retirement, you can draw money from your pension pot or exchange the money with an insurance company for a regular income until death – this is called an annuity.

There are several different pension options. Obviously, everyone is entitled to a State pension and everyone in work should be offered a workplace pension by their employer. Personal pensions can be taken in addition to any other pensions you hold, allowing you to make additional contributions as and when you can afford them.

To ensure you invest in the right pension for your own personal circumstances, speaking to an IFA is an important first step.

Why do I need a Pension?

Personal pensions are pensions that you arrange yourself, sometime also called defined contribution or ‘money purchase’ pensions. They will allow you a flexible retirement option as from the age of 55 you will be able to take a lump sum and/or a regular income. The amount you’ll eventually get out depends on how much you have paid in, how the fund’s investment has performed and whether you take a lump sum or monthly income – but the longer you have being paying in, the better chance you will have benefited from compound growth.

Planning for your retirement though a personal pension is a tax efficient way of saving – for every payment you make into your personal pension, you will receive tax relief from the government – in most cases this will mean an additional 20% will be added to your pension pot.


  • A tax efficient way of saving, where your payments into your pension are made from your pre-tax income.
  • You can have a personal pension whether you are employed, self-employed or not working. You can invest in a personal pension alongside a workplace pension – there are no restrictions on the number of different pension schemes you can belong too.
  • At retirement you can take you pension as an income or a tax free lump sum and an income.
Make an enquiry

How it works


The money you pay into a personal pension is put into investments, for example shares, by the pension provider. Payments into a pension can be regular or via individual lump sum payments.


You can start to receive a pension after you reach 55 years old and you can take 25% of the money as a tax free lump sum.


The remaining 75% will usually be taxed and this can be taken as cash, by buying a product with a guaranteed income (an ‘annuity’) or investing to get a regular, adjustable income (‘flexi-access drawdown’).