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Overview

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Personal pensions are pensions that you arrange yourself. They’re sometimes known as defined contribution or ‘money purchase’ pensions. You’ll usually get a pension that’s based on how much was paid in.

Some employers offer personal pensions as workplace pensions.

The money you pay into a personal pension is put into investments (such as shares) by the pension provider. The money you’ll get from a personal pension usually depends on:

• how much has been paid in

• how the fund’s investments have performed - they can go up or down

• how you decide to take your money

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Types of personal pension

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There are different types of personal pension. They include:

• stakeholder pensions - these must meet specific government requirements, for example limits on charges

• self-invested personal pensions (SIPPs) - these allow you to control the specific investments that make up your pension fund

You should check that your provider is registered with the Financial Conduct Authority (FCA), or the Pensions Regulator if it’s a stakeholder pension.

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Paying into a personal pension

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You can either make regular or individual lump sum payments to a pension provider. They will send you annual statements, telling you how much your fund is worth.

You usually get tax relief on money you pay into a pension. Check with your provider that your pension scheme is registered with HM Revenue and Customs (HMRC) - if it’s not registered, you won’t get tax relief.

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