Personal pensions

Finding the best pension for you

With this type of pension, the money you save into the plan is first invested (the accumulation stage) and then used at retirement (the decumulation stage).

Clearly, the more you save, the better your personal pension should be at retirement.

When you retire, you buy pension benefits using the money accumulated in your personal pension. The accumulated pension ‘pot’ can be taken either as taxable income, or as taxable income but with a tax-free lump sum (the tax-free cash lump sum is sometimes called the ‘Pension Commencement lump sum’ or PCLS – catchy eh!).

At the stage of drawing your pension (decumulating) , you will also have the option of transferring the accumulated pot to a pension plan which offers what are sometimes called ‘unsecured pension benefits’ (please see the section on Pension Income Drawdown). With Flexi Access Drawdown you can draw on the accumulated pension pot whilst the pension fund remains invested, in stark contrast to the Annuity purchase route.

Your pension can be protected against inflation too and you can also protect your income in the event of your death (see the Annuities page).

Please note that pension benefits can currently be drawn from age 55 onwards.

There is an intention to link the earliest date you can take retirement benefits to the age individuals can access their State Pension, from 2028.

This would mean that when State Pension age increases to 67 in 2028, the normal minimum pension age will also increase from 55 to 57. From then on it will remain 10 years below the State Pension age.

The change will affect most people born after March 1973, although public service schemes for Firefighters, Police and the Armed Forces are unlikely to be affected by the change.

You might want to talk to us first before considering your options.