What kinds of pension can I arrange for myself?

Pensions that you organise yourself are generally called personal pensions (your employer may arrange a personal pension for you as a workplace pension). Pensions that you organise yourself can be seen as a special kind of savings account. The advantage is that you get a good tax break, but in return your money is tied up until you are older.

When you can take money from your pension pot will depend on your pension scheme’s rules, but it’s usually after you’re 55. If you try to withdraw your money before that age, or someone encourages you to, you could be hit by a big tax bill.

There is more information about this on the government website.

Recent changes give you more flexibility about how you turn your savings into income, but it is still a long-term investment that can help support you financially when you are retired or no longer working as much. You could set up a personal pension with an insurance company, bank or other finance company.

One kind of personal pension is the stakeholder pension. If you are self-employed, then a personal pension is your only option for building up a pension on top of state provision.

Stakeholder pensions have limited charges, allow charge-free transfers and flexible contributions which can be at a low minimum level (it must not be set higher than £20) and, if you if you don’t want to choose how your money is invested, they do that for you (a default fund).

Employers can provide a gateway to two types of personal pension – stakeholder pensions and group personal pension schemes,usually known as GPPs .These are still treated as personal pensions for tax and legal purposes, but usually your employer will deduct your contribution from your pay and give it straight to the pension provider. You can read more about personal pensions on the Money Advice Service website.

Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from your union, a source on our free help page or an independent financial advisor before taking any action.

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