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What is a Personal Pension – the basics?

A personal pension is exactly what it says on the tin and you can have one if you’re employed but not in a company pension scheme, or you might want to have one in addition to a company pension. Or if you are self employed you may want to set up a personal pension or even if you are not working but can afford to put aside money for retirement you can have a personal pension.

You can pay a regular amount (usually monthly or annually), or a lump sum to the pension provider who will invest it on your behalf. The overall final value of your pension will depend on how much you have contributed over the years and how well the fund’s investments have performed. Charges are made for setting up and running your pension and are normally deducted from your fund in the form of fund management charges.

The Annual Allowance for pension contributions is £40,000pa from 6 April 2014 this includes both employee and employer contributions. You can carry forward unused contributions from the previous three years (ie. back to 2011/2012 for 2014/15), potentially allowing contributions of up to £160,000 in a single year. HMRC has confirmed that you do not need to have made a contribution to a pension scheme in a year to be able to carry forward unused allowances – you simply need to have been a member.

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For each pound you contribute to your scheme, the pension provider claims tax back from the government at the basic rate of 20 per cent. In practice, this means that for every £80 you pay into your pension, you end up with £100 in your pension pot. Enable’s IFA’s can help you decide if you want to set up a Personal pension.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 – Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.

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