At a glance

  • Pensions offer a tax-efficient way to save for later life
  • If you work for an employer, they will also pay into your pension
  • There are a range of pensions to suit everyone, whether you’re employed or self-employed
  • Starting early and saving regularly will help you afford the lifestyle you’d like in later life

At a glance

  • Pensions offer a tax-efficient way to save for later life
  • If you work for an employer, they will also pay into your pension
  • There are a range of pensions to suit everyone, whether you’re employed or self-employed
  • Starting early and saving regularly will help you afford the lifestyle you’d like in later life

At a glance

  • Pensions offer a tax-efficient way to save for later life
  • If you work for an employer, they will also pay into your pension
  • There are a range of pensions to suit everyone, whether you’re employed or self-employed
  • Starting early and saving regularly will help you afford the lifestyle you’d like in later life

What is a pension?

A pension is a type of long-term savings plan. It helps you save money while you’re working, which then can be used later in life, usually as you semi-retire and then fully retire. There are many different types of pensions, and you can have more than one.

Depending on the type of pension or pensions you have, your money can be invested in different types of equities and assets or held as cash savings.

You typically can begin taking money from your pension savings from age 55, though this is set to increase to 57 in 2028. 

When should I start saving for retirement?

The simple rule for pension savings is the sooner the better. Saving into a pension for as long as possible is the best way to benefit from valuable tax reliefs that can help you grow the amount you save.

The savings and investments in your pension will also have more time to grow. Remember, there is no guarantee that investments will always go up in value.

One of the best ways to get the most out of a pension is to start early and to save a little and often.

How much should I save?

A great way to set a target for your pension savings is to work out how much you’ll need in later life. To do this, you need to work out what fixed costs you’ll have, what sort of lifestyle you would like and how much it will all cost.

Once you know how much income you’ll need, you can work out how much you need to save to generate that income in later life.

There are online tools that will help you make these calculations and enable you to come up with accurate and realistic figures, and a financial adviser can also help you do the math and develop a saving strategy.

The sooner you work these figures out, the quicker you can get started on reaching your goals, and the longer you have to hit them, the easier it should be.

What are my pension options?

State Pension

The State Pension is paid by the government. To be eligible, you must have reached State Pension age, usually with at least 10 years of qualifying National Insurance contributions.

The amount you receive depends on your National Insurance record, and to receive the full amount, you need 35 or more qualifying years of contributions.

For most people, the state pension will not be enough to support the lifestyle they would like in retirement and so they should think about making additional provision through either a workplace or personal pension.

Workplace pension

All employers must set up a workplace pension for their employees. They have to automatically enrol you into this pension scheme if you:

  • Are aged between 22 and state pension age
  • Earn more than £10,000 a year
  • Usually work in the UK

You contribute a percentage of your regular pay into the scheme and your employer also has to make contributions on your behalf. The amount payable by you and your employer depends on the rules of the pension scheme, but there are minimum amounts set by the government.

If you want, you can opt out of the auto enrolment and choose not to join your workplace pension. However, by opting out you will miss out on your employer’s contributions and tax relief on your own contributions.

There are two types of workplace pension. The most common today are defined contribution (often called money purchase) pension schemes. What you get in later life from these schemes depends on how much was paid in by you and your employer, and how well the savings and investments have performed.

A small number of employers offer defined benefit (often called final salary) pension schemes. These give you a guaranteed income in retirement based on how long you have worked for an employer and your salary when you stopped.

Personal pension

Any adult can open their own individual pension, and they are generally defined contribution pension schemes. You can even open a child’s pension for sons, daughters or grandchildren.

You can choose how much to contribute to your personal pension, and different providers will offer varying ranges of charges and investment options. Other people can make contributions to your personal pension, such as your employer or partner.

How does paying into a pension work?

Whether you have an individual or a workplace pension, you will generally be able to make regular and/or one-off payments. Tax relief on pension contributions means the government also tops up what goes into your pension.

If you have a workplace pension, your employer will also make contributions.

Your employer will normally arrange the contributions to your workplace pension through its regular payroll. This means your contributions are made after basic-rate tax has been deducted. Higher-rate taxpayers can claim additional relief through their self-assessment tax return.

However, some employers also offer a salary sacrifice option. This means you give up – sacrifice – part of your gross salary. Your employer pays this amount, as well as its own contribution, into your pension. By paying contributions via salary sacrifice, both the employer and employee save on National Insurance contributions.

There are annual and lifetime limits on how much you can contribute to your pension. Exceeding these limits affects the tax relief you receive and triggers charges.

How do I receive money from a pension?

If you have a defined benefit pension, you may be able to withdraw some of its value as a lump sum, depending on the individual scheme’s rules. You then receive a guaranteed income for life at the age stated in the scheme’s rules.

If you have a defined contribution pension (including both workplace and individual schemes) you can withdraw up to 25% as a tax-free lump sum from 55 (57 from 2028).

You can then:

  • Take the rest as cash
  • Buy an annuity and generate a guaranteed income for life
  • Leave your pension invested and take regular or one-off withdrawals over time

There are different tax implications for each option, so you will need to consider them each very carefully.

 

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

What is a pension?

A pension is a type of long-term savings plan. It helps you save money while you’re working, which then can be used later in life, usually as you semi-retire and then fully retire. There are many different types of pensions, and you can have more than one.

Depending on the type of pension or pensions you have, your money can be invested in different types of equities and assets or held as cash savings.

You typically can begin taking money from your pension savings from age 55, though this is set to increase to 57 in 2028. 

When should I start saving for retirement?

The simple rule for pension savings is the sooner the better. Saving into a pension for as long as possible is the best way to benefit from valuable tax reliefs that can help you grow the amount you save.

The savings and investments in your pension will also have more time to grow. Remember, there is no guarantee that investments will always go up in value.

One of the best ways to get the most out of a pension is to start early and to save a little and often.

How much should I save?

A great way to set a target for your pension savings is to work out how much you’ll need in later life. To do this, you need to work out what fixed costs you’ll have, what sort of lifestyle you would like and how much it will all cost.

Once you know how much income you’ll need, you can work out how much you need to save to generate that income in later life.

There are online tools that will help you make these calculations and enable you to come up with accurate and realistic figures, and a financial adviser can also help you do the math and develop a saving strategy.

The sooner you work these figures out, the quicker you can get started on reaching your goals, and the longer you have to hit them, the easier it should be.

What are my pension options?

State Pension

The State Pension is paid by the government. To be eligible, you must have reached State Pension age, usually with at least 10 years of qualifying National Insurance contributions.

The amount you receive depends on your National Insurance record, and to receive the full amount, you need 35 or more qualifying years of contributions.

For most people, the state pension will not be enough to support the lifestyle they would like in retirement and so they should think about making additional provision through either a workplace or personal pension.

Workplace pension

All employers must set up a workplace pension for their employees. They have to automatically enrol you into this pension scheme if you:

  • Are aged between 22 and state pension age
  • Earn more than £10,000 a year
  • Usually work in the UK

You contribute a percentage of your regular pay into the scheme and your employer also has to make contributions on your behalf. The amount payable by you and your employer depends on the rules of the pension scheme, but there are minimum amounts set by the government.

If you want, you can opt out of the auto enrolment and choose not to join your workplace pension. However, by opting out you will miss out on your employer’s contributions and tax relief on your own contributions.

There are two types of workplace pension. The most common today are defined contribution (often called money purchase) pension schemes. What you get in later life from these schemes depends on how much was paid in by you and your employer, and how well the savings and investments have performed.

A small number of employers offer defined benefit (often called final salary) pension schemes. These give you a guaranteed income in retirement based on how long you have worked for an employer and your salary when you stopped.

Personal pension

Any adult can open their own individual pension, and they are generally defined contribution pension schemes. You can even open a child’s pension for sons, daughters or grandchildren.

You can choose how much to contribute to your personal pension, and different providers will offer varying ranges of charges and investment options. Other people can make contributions to your personal pension, such as your employer or partner.

How does paying into a pension work?

Whether you have an individual or a workplace pension, you will generally be able to make regular and/or one-off payments. Tax relief on pension contributions means the government also tops up what goes into your pension.

If you have a workplace pension, your employer will also make contributions.

Your employer will normally arrange the contributions to your workplace pension through its regular payroll. This means your contributions are made after basic-rate tax has been deducted. Higher-rate taxpayers can claim additional relief through their self-assessment tax return.

However, some employers also offer a salary sacrifice option. This means you give up – sacrifice – part of your gross salary. Your employer pays this amount, as well as its own contribution, into your pension. By paying contributions via salary sacrifice, both the employer and employee save on National Insurance contributions.

There are annual and lifetime limits on how much you can contribute to your pension. Exceeding these limits affects the tax relief you receive and triggers charges.

How do I receive money from a pension?

If you have a defined benefit pension, you may be able to withdraw some of its value as a lump sum, depending on the individual scheme’s rules. You then receive a guaranteed income for life at the age stated in the scheme’s rules.

If you have a defined contribution pension (including both workplace and individual schemes) you can withdraw up to 25% as a tax-free lump sum from 55 (57 from 2028).

You can then:

  • Take the rest as cash
  • Buy an annuity and generate a guaranteed income for life
  • Leave your pension invested and take regular or one-off withdrawals over time

There are different tax implications for each option, so you will need to consider them each very carefully.

 

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

What is a pension?

A pension is a type of long-term savings plan. It helps you save money while you’re working, which then can be used later in life, usually as you semi-retire and then fully retire. There are many different types of pensions, and you can have more than one.

Depending on the type of pension or pensions you have, your money can be invested in different types of equities and assets or held as cash savings.

You typically can begin taking money from your pension savings from age 55, though this is set to increase to 57 in 2028. 

When should I start saving for retirement?

The simple rule for pension savings is the sooner the better. Saving into a pension for as long as possible is the best way to benefit from valuable tax reliefs that can help you grow the amount you save.

The savings and investments in your pension will also have more time to grow. Remember, there is no guarantee that investments will always go up in value.

One of the best ways to get the most out of a pension is to start early and to save a little and often.

How much should I save?

A great way to set a target for your pension savings is to work out how much you’ll need in later life. To do this, you need to work out what fixed costs you’ll have, what sort of lifestyle you would like and how much it will all cost.

Once you know how much income you’ll need, you can work out how much you need to save to generate that income in later life.

There are online tools that will help you make these calculations and enable you to come up with accurate and realistic figures, and a financial adviser can also help you do the math and develop a saving strategy.

The sooner you work these figures out, the quicker you can get started on reaching your goals, and the longer you have to hit them, the easier it should be.

What are my pension options?

State Pension

The State Pension is paid by the government. To be eligible, you must have reached State Pension age, usually with at least 10 years of qualifying National Insurance contributions.

The amount you receive depends on your National Insurance record, and to receive the full amount, you need 35 or more qualifying years of contributions.

For most people, the state pension will not be enough to support the lifestyle they would like in retirement and so they should think about making additional provision through either a workplace or personal pension.

Workplace pension

All employers must set up a workplace pension for their employees. They have to automatically enrol you into this pension scheme if you:

  • Are aged between 22 and state pension age
  • Earn more than £10,000 a year
  • Usually work in the UK

You contribute a percentage of your regular pay into the scheme and your employer also has to make contributions on your behalf. The amount payable by you and your employer depends on the rules of the pension scheme, but there are minimum amounts set by the government.

If you want, you can opt out of the auto enrolment and choose not to join your workplace pension. However, by opting out you will miss out on your employer’s contributions and tax relief on your own contributions.

There are two types of workplace pension. The most common today are defined contribution (often called money purchase) pension schemes. What you get in later life from these schemes depends on how much was paid in by you and your employer, and how well the savings and investments have performed.

A small number of employers offer defined benefit (often called final salary) pension schemes. These give you a guaranteed income in retirement based on how long you have worked for an employer and your salary when you stopped.

Personal pension

Any adult can open their own individual pension, and they are generally defined contribution pension schemes. You can even open a child’s pension for sons, daughters or grandchildren.

You can choose how much to contribute to your personal pension, and different providers will offer varying ranges of charges and investment options. Other people can make contributions to your personal pension, such as your employer or partner.

How does paying into a pension work?

Whether you have an individual or a workplace pension, you will generally be able to make regular and/or one-off payments. Tax relief on pension contributions means the government also tops up what goes into your pension.

If you have a workplace pension, your employer will also make contributions.

Your employer will normally arrange the contributions to your workplace pension through its regular payroll. This means your contributions are made after basic-rate tax has been deducted. Higher-rate taxpayers can claim additional relief through their self-assessment tax return.

However, some employers also offer a salary sacrifice option. This means you give up – sacrifice – part of your gross salary. Your employer pays this amount, as well as its own contribution, into your pension. By paying contributions via salary sacrifice, both the employer and employee save on National Insurance contributions.

There are annual and lifetime limits on how much you can contribute to your pension. Exceeding these limits affects the tax relief you receive and triggers charges.

How do I receive money from a pension?

If you have a defined benefit pension, you may be able to withdraw some of its value as a lump sum, depending on the individual scheme’s rules. You then receive a guaranteed income for life at the age stated in the scheme’s rules.

If you have a defined contribution pension (including both workplace and individual schemes) you can withdraw up to 25% as a tax-free lump sum from 55 (57 from 2028).

You can then:

  • Take the rest as cash
  • Buy an annuity and generate a guaranteed income for life
  • Leave your pension invested and take regular or one-off withdrawals over time

There are different tax implications for each option, so you will need to consider them each very carefully.

 

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

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