Personal Pensions
These are savings plans designed specifically for retirement planning. They are therefore given a special tax treatment in order to try to encourage people to save for retirement. Effectively, you will receive tax relief on your contributions at your highest rate of tax. This means that a contribution of £100 would only cost £80 for a basic rate taxpayer or £60 for a higher rate taxpayer. These investment funds then grow virtually free of tax.
When you come to retire, there are many options as to how you draw your pension benefits but you will be able to take up to a quarter of it as a tax-free cash lump sum with the rest used to provide you with an income. The main drawback therefore to a personal pension is that once you have contributed the monies into a plan you will not be able to take all the money back out and the earliest possible retirement age is 55.
PLEASE NOTE RONNIE B MORTGAGES GIVES NO ADVICE IN CONNECTION WITH
PENSIONS