An overview of pension types
There are many different types of pensions, including Personal Pensions, Final Salary Schemes, as well as several others.
Some key features of a pension include:
- A tax-efficient way of saving for retirement
- Tax relief is available on contributions
- Tax relief available on contributions up to 100% of your salary each year or £3,600 if you have no earnings (capped at the Annual Allowance)
- Both employed, self-employed or the unemployed can contribute to a pension
- Maximum Annual Allowance contribution limits set by HM Revenue & Customs. Limit for 2013/14 is £50,000. From the 6th April 2014, this limit will become £40,000
- Wide choice of investment funds
- In most cases you can transfer and consolidate your plans to alternative providers at any time
- Choice of options when you reach retirement – Pension Drawdown or Annuity
A pension is a long term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.