What is a private pension?

Описание: In a nutshell: what is a private pension?

Learn more: https://www.nutsaboutmoney.com/pensio...

Top picks for pension providers:
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A private pension is a pension that’s in your name, so it’s private to you. It’s not the government pension, which is called the State Pension, which you’ll likely get at 66 years old but rising to 68.

Instead, with a private pension, you save money into it over your lifetime, often through your job, called a workplace pension, and by setting one up yourself, called a personal pension.

Saving into a private pension is tax-free for most people, and you can save up to your yearly income each year, or £60,000, whichever is lower.

Typically experts will look after investing your pension pot, and it can grow considerably over time. You can also make your own investment decisions within a self-invested personal pension, although only recommended for experienced investors.

You can access your pension from the age of 55, although rising to 57 soon. When you do access your pension, 25% of it will be tax-free, and you can take it as a lump-sum if you want to. You might pay tax on the remaining 75%, it depends how much you withdraw each year, and the tax rules at the time.

A large private pension is pretty much essential for retirement, as the State Pension alone won’t be enough to live on. And often having both a workplace pension and a personal pension is a great way to build up enough for a comfortable retirement.

Opening a private pension is super easy, and if you’re not sure which provider to use, our top picks are in the description.

Learn more about how much you might want to be saving for retirement, and how much you’ll need in your pension pot with our pension calculator:
https://www.nutsaboutmoney.com/pensio...

By the way, technically, we’re talking about ‘defined contribution pensions’, where you save into it and build up a pension pot over time.

The alternative is a ‘defined benefit pension’, which are common in government jobs such as the NHS, where you get a set retirement income when you retire, based on things like how long you’ve worked there, and your salary.