A personal pension plan helps you save money for retirement and is available to any United Kingdom resident who is between the ages of 16 and 75 (Children under 16 cannot start a plan in their own right but a Legal Guardian can start one on their behalf). You, in conjunction with your adviser, choose the pension provider and make the arrangements for paying the contributions to the plan.
You can start a personal pension even if you have a workplace pension or if you’re self-employed and don’t have a workplace pension. You don’t have to be working to take out a Personal Pension Plan and you can also provide a Personal Pension Plan for your spouse/partner or your child/children.
When you contribute to a Personal Pension plan, your money is invested by the pension provider (usually an insurance company) to build up a fund/pension pot over a number of years.
If you’re a basic rate taxpayer, your pension provider will claim back Income Tax at the basic 20 per cent rate on your behalf on the contributions you make and add it to your pension pot. Higher rate taxpayers claim the additional rebate through their tax returns.
The total amount (the ‘annual allowance’) you or your employer can contribute to a defined contribution personal pension scheme, or schemes, is limited to £60,000* per annum or your annual salary, whichever is lower. If you contribute more than that you will pay a tax charge. For 2023 to 2024, no Lifetime Allowance charge will arise, but the Lifetime Allowance legislation will remain on the statute until Finance Act 2024..
Most schemes allow you to withdraw 25% of your fund tax-free from age 55 onwards. Subsequent withdrawals are subject to income tax.
Although most personal pension schemes specify an age when you can start withdrawing benefits from your personal pension (usually between 60 and 65) you are allowed to do that from age 55 if you wish. You don’t have to stop work to draw benefits from your plan.
If you die before the age of 75 and haven’t purchased an annuity, your beneficiaries can inherit the entire pension fund as a lump sum or draw an income from it completely free of tax. If you’re over 75 years of age when you die, there will be tax to pay on any withdrawals made by the recipient of your fund.
*Tax year 2023/2024
The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.
Tax treatment varies according to individual circumstances and is subject to change.
CONTACT US
Miller Financial Planning Ltd
Eastlands Court Business Centre
St Peters Road
Rugby
Warwickshire
CV21 3QP
T: 01788 577775
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Miller Financial Planning Ltd is an appointed representative of Quilter Financial Planning Solutions Limited, which is authorised and regulated by the Financial Conduct Authority. Registered as a limited company in England & Wales No:06752854. Registered Office: Eastlands Court Business Centre,St. Peters Road, Rugby, Warwickshire, CV21 3QP.
The Financial Conduct Authority does not regulate advice on commercial and agricultural mortgages, some buy to let mortgages, or advice on some tax matters.
The information and content within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK.
Approval Quilter Financial Planning Solutions Limited. 05/05/2023
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