Personal Pension

A personal pension, otherwise known as a PPP or private pension plan is a way of saving for your future, when a company pension is unavailable or unsuitable for your needs.

A customer will either make monthly payments or a lump sum investment into their personal pension scheme, and the pension scheme fund manager will invest this money on their behalf.

The money can then be withdrawn when the customer reaches pension age, and is used to purchase an annuity, which is an insurance product which will guarantee you a fixed monthly income until you die.

Use our site to work out your pension calculation in retirement.

Your personal pension contributions can be invested in a number of ways, and there is no guarantee of a positive return on those investments. UK and overseas equities, cash, commercial property and fixed interest bonds are all options for investment and some carry more risk than others.

The investment opportunities that carry more risk also have a change of providing better returns. Generally a customer will take more chances when they are younger, as a positive gamble can increase the value of the fund greatly, while a negative gamble can be made up for later in life. When investors near retirement age they don’t want to do anything to jeopardise their pension prospects so they tend to have their money invested in low risk investments, like guaranteed interest bonds.

Anybody over the age of 16 can start to invest in a personal pension, so long as they are a UK resident. The money they invest will not be accessible until retirement, and you do not need to be employed to start saving.

Those who are self employed, and have no company pension scheme to choose from are quite likely to start investing money in a personal pension.

A personal pension may not be the most suitable pension scheme for someone who works at a company that offer a company pension scheme, and will make contributions into this on their employee’s behalf.

You can currently access you’re personal pension from the age of 55, although many wait until nearer retirement. You can take 25% of your pensions value tax free at that age if you wish, although it’s important to note that any money you do take out will reduce the value of your income when you do finally buy an annuity.

Personal pensions usually have charges attached to them, to pay for the pension and the pensions fund manager, as well as for switching money from one pension to another, and for transferring in and out of the pension.

If you need a pension calculator online then visit pensioncalculator.com today.