Individual pensions explained
Put simply, a pension is a tax-efficient savings plan that you can pay into in order to build up a pot of money to support you in retirement.
Individual pensions are also known as defined contribution, or money purchase, pensions. Money paid into these is invested and could go down as well as up. This means the final value of your pension pot will depend on how much you’ve paid in, and performance of the funds you invested in (or the performance of the with-profits fund if you’re a with-profits customer).
If you want to know more about what you can do with your pension when you come to take your money you should read Your retirement options.
If you have a final salary pension, a Guaranteed Minimum Pension, or a pension with a Guaranteed Annuity Rate these are known as Safeguarded benefits. It is important to note that in most cases, these benefits will be lost if you choose any retirement option other than taking an annuity with your existing pension provider. If you’re not sure whether you’ve got one of these pensions you can find out from your most recent annual statement.
Before you make any decision about your retirement, we recommend you use the government’s free and impartial guidance service, Pension Wise, available to anyone over 50 wanting to discuss their retirement options. You can contact the Pension Wise service on www.pensionwise.gov.uk.
You should also consider getting advice from a financial adviser, and in some circumstances you have to. A Financial Adviser will provide you with appropriate tailored financial advice taking into account your individual personal circumstances. If you don’t have a financial adviser you can find an Adviser in your area at www.unbiased.co.uk. You may have to pay for this advice.