Pensions

Personal Pensions

What are Personal Pensions? Personal pensions are individual contracts between you and the provider which is usually an insurance company or bank. You are responsible for paying contributions. Personal pensions are a way of making regular savings for your retirement. The money you save is put into investments for you, such as stocks and shares. This 'fund' will then be used to buy a rension, from an insurance company, to give you a regular income when you retire.

Tax Benefits Personal Pensions! An important benefit of contributing to a personal pension is the tax refief it gives you. With a basic rate of income tax of 22%, every £100 that goes into your pension costs you £78 based on the tax year 2005/06). With a higher rate of income tax of 40%, every £100 that goes into your pension costs you £60 (based on the tax year 2005/06).

Stakeholder Pensions

Stakeholder pensions are a type of personal pension which has minimum standards set down in law. Stakeholder pensions have a cap on annual management charges, they are flexible and they allow you to make contributions (which can be as little as £20 at a time) when you can.

As with personal pensions, the money you save is put into investments for you such as stocks and shares, and your 'fund' will then be used to buy a pension, from an insurance company, to give you a regular income when you retire.

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