A pension is a form of savings scheme, whereby you save income in early life, taken directly from your income, to be paid back to you as a pension in retirement.
There are a range of pension schemes available, and also a range of products designed to maximise your pension payout when you retire, and also to release your pension before retirement if you wish.
The main types of pension products available in the uk are:
The suitability of each pension product will depend on your personal circumstances. The best course of action is to speak to a qualifed professional.
Pension release products are designed for individuals wishing to release the money they have tied up in their pension before retirement.
The amount available to be released depends on the size of your pension fund. But, in general, you can release up to 25% of the total value of your pension fund as a tax free cash lump sum. The remainder of your fund can be taken as a pension after retirement.
Pension consolidation is aimed at individuals with multiple pension funds, maybe because they have changed jobs several times, and paid into pension funds with each employer.
Maintaining separate pension funds can be more complex and more time-consuming. In addition, you may not be maximising your return by retaining monies in old schemes.
A pension transfer involves transferring the funds you have built up in one pension fund to another fund. As a result, all the contributions you have made into your old fund are transferred to another pension fund, and from that point onwards you will be making contributions into the new fund.
Pension transfers are most commonly done when changing jobs.
Pension transfers enable individuals to maximise the return they receive on the monies they have invested in their pension, by selecting the most appropriate pension provider and pension scheme.
At Pensions Advice UK, we do not sell pension products directly, and therefore we retain our independence. We can present to you the independent facts about pension products, helping you to make an informed decision about which product suits your needs.
The information presented above and throughout this website are the personal opinions of the authors, and are not advice of any kind. You should seek independent advice from a qualified professional prior to committing to any pension arrangement.
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