The UK Rules
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Workplace and Private Pensions

Workplace and Private Pension Rules

What is a pension scheme or a personal pension plan? Workplace and private pensions are tax-efficient, long term ways of saving money for your retirement.

How Pensions Work in the United Kingdom

Occupational and private pension schemes help to secure a regular income. They can provide financial benefits for people in older life.

Besides the new State Pension, individuals or their employers can put aside long term investment contributions throughout their working lives.

The aim is for the maturing fund, called a pension pot, to make a profit. In most cases the fund yields regular payments for pensioners during old age retirement.

Pension funds often grow best when a percentage of your earnings is 'automatically' invested. In most cases the money goes into stocks and shares. As the fund grows it should provide you with regular payments during old age retirement.

The pot payments are usually deducted from your salary on paydays. As a rule your employer will contribute extra money into the same fund. That means your pension scheme also benefits from UK Government tax relief. Even so, private pension rules differ for self-employed workers.

Once you become eligible to receive your pension, the fund can pay you a regular income while you are alive. The scheme also allows you to take a tax-free lump sum from workplace pensions when you retire.

In some circumstances, you can take it all in one payment. This is more common if your savings are minimal. But, single lump sums are liable to income tax after the first 25%.

Risks associated with Pension Schemes

Investments carry some degrees of risk. The value of stocks and shares fluctuates up and down. But, higher returns often result from aggressive investments in areas with higher risk.

Most financial advisers consider bonds to be less risky. There is more guarantee against losing your money. That means there is less risk to the value of your pension pot. But, a bad financial decision could affect the value of your final pension savings.

Workplace and Personal Pensions Guide

A to Z Rights to Benefits GuideA to Z Employment Guide

EMPLOYMENT LAW: The list of employment rules and regulations is a human resource guide. Find information for employers and employees with extra details on welfare benefits, taxation, and workers' rights.

Private Pension TypesEarly Retirement

RETIRING EARLY: Taking early retirement is a viable option for many people nowadays. So, how does retiring early affect a pension and the welfare benefits you get?

RETIREMENT PLANNING: The information in the guide will help you plan your retirement income. It explains how to work out the amount you might get when you retire so you can plan ahead.

Private Pension TypesPrivate Pensions

PERSONAL PENSION RULES: Information in the section explains the rules of personal pensions and your rights. There is further guidance on choosing a personal pension (e.g. stakeholder pensions).

PRIVATE PENSION RULES: The section explains the two different types of private pension plans and how they work. Check what you can get from 'defined contribution' and 'defined benefit' pension schemes.

SIPP PENSION RULES: The self-invested personal pension is the buzz word in low-cost DIY retirement planning. Find out everything you need to know about SIPPs including how to start a SIPP.

State PensionState Pension

UK STATE PENSION: The State Pension pays a regular payment to most people during their life in retirement. The government old age pension starts when you reach the official retirement age.

Workplace and Personal Pensions GuideWorkplace Pensions

COMPANY PENSION RULES: The UK Government operates a workplace pension scheme. The welfare benefit also helps to support some widows, widowers, and disabled people.

Important InformaationSeek impartial or professional advice from an independent financial adviser before making investments.

State Pension, Company Pensions, and Private Pension Rules in the United Kingdom