Personal Pension Schemes
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This term is now redundant in its technical pre-April 2006 sense, although it is expected to continue as a marketing/descriptive term.
What you need to know post April 2006 if you have an existing Personal Pension Plan contract.
It will continue as a Money Purchase Arrangement, and you/your employer can invest as much as you like, subject to the Annual and Lifetime Allowance rules.
The information below relates to pre-April 2006.
A simple fund-based contract where you (and perhaps your employer) put money in, and in due course you use the fund to buy a pension (see Annuities), and can also take up to 25% of the fund (excluding any portion of the fund in respect of being contracted out of the State Earnings Related Pension scheme or Second State Pension) as Tax Free Cash..
The amount you can invest is governed by limits that relate to your age and your income - or £3,600 p.a. gross if greater..
You normally get tax relief on the money you put in.
Your fund value is dependent on investment returns, contributions, charges on the contract, term to retirement (and in some cases the financial strength of the pension company) but NOT the financial position of your employer. However, if the employer ceases contributing to the plan, this will obviously affect the final fund value.
You might be able to manage your own investment strategy to some degree.
Options are now available for , allowing a switch to part time employment before full retirement, or retirement at a later age.
Last updated on May 2, 2006