What is a Personal Pension?

8 Feb 2024

A personal pension, sometimes known as a private pension, is a type of savings plan designed to help you save for retirement. It is a product you can set up and manage yourself. The amount you have at retirement will hinge on how much you contribute and how those contributions are invested over time.

How Do Personal Pensions Work?

Unlike workplace pensions, which are arranged by employers, a personal pension allows you the freedom to choose and manage your plan. You can pick from a variety of pension funds, where professional money managers will invest your savings in different assets. This setup grants you the control to make regular or one-off payments into your pension. Additionally, your pension provider will boost your savings by claiming tax relief on your contributions.

When you retire, typically any time from the age of 55 (57 from 2028), you can decide how to use the funds from your personal pension. There are several options available, and each can cater to different needs and goals.

Tax Relief on Personal Pensions

When investing in a personal pension, you gain the advantage of tax relief. For example, if you contribute £100, the government adds an extra £25, elevating your total investment to £125. If you're a higher or top rate taxpayer, you can claim even more back through your tax return. For the fiscal year 2024/25, you can receive this relief up to the smaller of 100% of your salary or £60,000.

Who Needs a Personal Pension?

Both personal and workplace pensions are excellent supplements to the state pension, the latter of which has a maximum disbursement of £11,502.40 per year as of 2024/25. While it's often beneficial to enrol in a workplace pension due to employer contributions, having a personal pension is also wise. This is especially true if you're self-employed, opted out of a workplace pension, or if you want to diversify your retirement savings.

Penny’s Personal Pension Plan

At Penny, we simplify the process of managing your retirement savings. Not only can we help consolidate your old workplace pensions into a single personal pension plan, but we also offer an easy-to-use app that allows you to view and manage your pension anytime, anywhere. With Penny, planning for retirement is straightforward and stress-free.

Choosing the right pension could greatly influence your financial security in retirement. While personal pensions offer flexibility and potential tax benefits, it's always good to consider all your options. Explore various pathways and, if needed, consult with a financial advisor to make informed decisions about your retirement planning.

SOME IMPORTANT THINGS YOU SHOULD KNOW
Pensions are long terms investments. It’s important that you know the value of your investment could go up as well as down. You could get back less than you put in. Past performance is not necessarily a guide to the future and pension investing is not intended to be a short-term option. Penny does not provide financial advice so please be sure that this investment is right for you.

Your current pension might have special benefits that will be lost if you transfer to Penny. These special benefits include: Guaranteed Annuity Rate (GAR), Guaranteed Bonus Rate (GBR), Guaranteed Minimum Pension (GMP) and Protected Tax Free Cash (PFTC) over 25%. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

Your current provider might charge you a transfer-fee to transfer your pension to Penny. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

You should consider the charges and benefits before transferring your old pensions to your new plan, and consider whether the risk and reward profile of the investments offered matches your needs. It may be that your current provider has lower fees than Penny - where this is the case, we recommend that you carefully consider whether to transfer your pension to Penny, as you may be better off not transferring in these cases.

If you are in any doubt about proceeding you should contact a financial adviser.
© Copyright 2024 Penny Technology Limited. Company registration: 11999643. FCA Reference Number: 931299.
SOME IMPORTANT THINGS YOU SHOULD KNOW
Pensions are long terms investments. It’s important that you know the value of your investment could go up as well as down. You could get back less than you put in. Past performance is not necessarily a guide to the future and pension investing is not intended to be a short-term option. Penny does not provide financial advice so please be sure that this investment is right for you.

Your current pension might have special benefits that will be lost if you transfer to Penny. These special benefits include: Guaranteed Annuity Rate (GAR), Guaranteed Bonus Rate (GBR), Guaranteed Minimum Pension (GMP) and Protected Tax Free Cash (PFTC) over 25%. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

Your current provider might charge you a transfer-fee to transfer your pension to Penny. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

You should consider the charges and benefits before transferring your old pensions to your new plan, and consider whether the risk and reward profile of the investments offered matches your needs. It may be that your current provider has lower fees than Penny - where this is the case, we recommend that you carefully consider whether to transfer your pension to Penny, as you may be better off not transferring in these cases.

If you are in any doubt about proceeding you should contact a financial adviser.
© Copyright 2024 Penny Technology Limited. Company registration: 11999643. FCA Reference Number: 931299.
SOME IMPORTANT THINGS YOU SHOULD KNOW
Pensions are long terms investments. It’s important that you know the value of your investment could go up as well as down. You could get back less than you put in. Past performance is not necessarily a guide to the future and pension investing is not intended to be a short-term option. Penny does not provide financial advice so please be sure that this investment is right for you.

Your current pension might have special benefits that will be lost if you transfer to Penny. These special benefits include: Guaranteed Annuity Rate (GAR), Guaranteed Bonus Rate (GBR), Guaranteed Minimum Pension (GMP) and Protected Tax Free Cash (PFTC) over 25%. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

Your current provider might charge you a transfer-fee to transfer your pension to Penny. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

You should consider the charges and benefits before transferring your old pensions to your new plan, and consider whether the risk and reward profile of the investments offered matches your needs. It may be that your current provider has lower fees than Penny - where this is the case, we recommend that you carefully consider whether to transfer your pension to Penny, as you may be better off not transferring in these cases.

If you are in any doubt about proceeding you should contact a financial adviser.
© Copyright 2024 Penny Technology Limited. Company registration: 11999643. FCA Reference Number: 931299.