Personal Pension Plan Guide

Learn What You Need To Know With Our Personal Pension Plan Guide

If you don't want to join your company pension scheme, or the nature of your work prevents you from doing so, you could consider a personal pension plan.

Why Would I Need A Personal Pension Plan?

If you are self-employed, or if you know you are likely to move jobs frequently, then you may not have access to a company pension scheme. Most pensions advisers would say that it's preferable to be part of a company pension plan, because your employer also contributes a percentage of your salary to the fund, and the benefits are often better than with personal plans. That doesn't mean, however, that you shouldn't plan for your retirement just because you're not part of a company scheme. In fact, it makes it more important that you do consider your financial future.

What Is A Personal Pension Plan?

In 1985, the government introduced the personal pension plan to allow employees whose employers did not provide a company plan to save for retirement. The personal pension plan also allowed those who were self-employed to have a means of securing a retirement fund. Although the contribution levels are entirely up to the individual, tax relief is only allowed at a certain percentage of annual net salary, at specified stages.

What Are The Benefits Of A Personal Pension Plan?

Flexibility is the key benefit of the personal pension plan. No matter where you work, you can continue paying into the fund, and as your salary increases, you can increase the contributions you make. In addition, some schemes may allow you to pay a lump sum into the fund, or to take a payment holiday. In addition, you have full details of all the charges and fees levied on your fund.

Can I Have A Personal Pension Plan And A Company Pension Plan At The Same Time?

If you have previously participated in a company pension plan, and then decided to leave in order to become self-employed, or start a new business, your existing pension scheme will be frozen, and the funds within it will grow in line with the general fund. You can then start a personal pension plan so that you can continue saving for your retirement. If you have a personal plan and join a company, you can ask your employer if they will contribute to your personal pension plan, or you can stop paying into your personal plan and join the company scheme. Your personal plan provider, however, may still levy charges on the fund, so it would be wise to take some professional advice if you find yourself in this position.

How Do I Find Out More?

If you think you would benefit from a personal pension plan, then you should seek some independent financial advice. Pensions advisers are experts in this complex market and are ideally placed to talk to you about your current situation and advise you on the best types of plan for you.