Personal pensions
Plan for the future with a personal pension
Wednesday, 18, Aug 2010 12:00
Personal pensions are a way of saving for your retirement that takes advantage of government tax breaks and are linked to an individual rather than a job.
Personal pensions can be held as standard pensions, stakeholder pensions (with rules on charges and what funds are invested in) or as self-invested personal pensions.
People savings for pensions in the UK have access to a wide range of tax breaks on the money they invest, but they are not entirely tax free.
Money placed in a personal pension is exempt from income tax. This means that for every pound of take-home pay put in a pension fund, the government repays the income tax on it - offering a potential 40 per cent boost (for higher rate tax payers).
Pension fund growth is not taxed, although dividends from stocks held in pension funds are. Pensions are also exempt from capital gains tax.
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