A personal pension plan is designed to offer a lump sum and income in retirement. It's important to plan for your retirement early.
Personal pension plans
You don’t need to be employed to have a personal pension plan. It can be set up for your spouse, partner, child, or children, and they can take over the plan after turning 18.
Anyone residing in the UK below the age of 75 can contribute to a personal pension plan, which is invested to build a fund.
The retirement payout depends on factors such as contributions, fund performance, charges, and annuity rates at the retirement date. Annuity rates are crucial when converting the pension fund.
The minimum age to access personal pension benefits is 55, and there is no maximum age limit.
If you pass away before accessing your pension, and you are under 75, your funds can often be inherited by your spouse or chosen beneficiary without inheritance tax (other taxes may apply).
If you haven’t accessed your pension and pass away after age 75, the pot can still be passed on without inheritance tax. If received as a lump sum, it is taxed at your marginal rate, but if taken as income, it is subject to income tax.
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