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Alternatives - Personal Pensions
Personal Pensions | The State Pension Scheme
You can choose to take out a Personal Pension through an insurance company, bank, building society, unit trust or friendly society. The money you pay during your working life is invested to build up a cash fund which at retirement is used to buy a pension.
Up to 25% of the fund can be taken as a tax-free lump sum at retirement. You can take Personal Pension benefits on retirement at any time from age 50.
You do not need to transfer your pension if you move to new employment outside the NHS, but you should remember that a Personal Pension will:
- depend on investment performance and the state of the stock market at the time you retire – neither can be guaranteed;
- be significantly reduced if you want family benefits or limited index-linking.
You will get tax relief on the payments you make, but your employer will normally only pay the minimum contribution required by law.
Commission and administration charges will reduce the amount actually invested to provide your pension. These costs vary but can be considerable.
What do they cost?
Contributions vary according to the level of retirement benefits wanted. The lower the contributions, the lower the retirement benefits, so you need to make sure that you have some idea of the level of retirement benefits you are aiming for. Personal Pension providers will give you projected estimates.
You may vary your payments, but they are subject to Inland Revenue maximum limits according to age.
The Securities and Investments Board, which regulates the Personal Pensions Industry, has said employees will nearly always be better off if they belong to their occupational pension scheme.