While with any investment the value can go up or down, by the time you retire you can expect to have grown a worthwhile nest egg. After 55, you can access your money as a lump sum or regular income. 

With locked in savings, you have peace of mind that whatever life throws up, your money will be waiting for you when you retire. 

Why do you need a pension?

In the UK, when you reach State Pension Age you can get a regular payment from the government known as the Basic State Pension. The most you can currently get is £203.85 per week. 

While a state pension is a solid foundation, for many people this won’t be enough to afford the things they would like in retirement. That’s why your own long-term savings are an important part of the picture.

Putting money into a pension while you’re working is a very effective way to build a nest egg and give you a better income at retirement.  

There are many benefits of pensions

Pensions are one of the most tax-efficient ways of saving for retirement. If you work in the UK, the government will give you tax relief on your savings, which will be added to your pension pot. And you may have the option to take a tax-free lump sum when you retire.

Access free impartial retirement advice at Pension Wise, the UK government’s guidance service.

Tax relief + government contributions

When you contribute to your pension fund, the government will add 25% of the contribution as basic rate tax relief. For example, you contribute £800, the government adds £200 giving you £1000. Higher Rate taxpayers can claim back a further £200 via their tax return, making the actual cost of the £1000 in your pension pot only £600! Further tax relief can be claimed by Additional Rate taxpayers.

Investment sheltered from tax

Money in your pension pot can grow faster because the growth is not subject to any personal taxes. All interest on cash deposits is tax free and there is no tax payable on gains in property funds. Also, if you die before taking any money from your fund, then the money in your fund will normally be paid, free of Inheritance Tax, to the persons you have nominated.

Tax free lump sum

At any time after the age of 55 you can begin drawing money from your fund. You have the option when you first start taking money out to take a tax free lump sum of up to 25% of your fund value; the balance of the fund can then be used to provide a taxable income in your retirement.

Alternatively, you may decide to take a series of lump sums from your pot; if you do this then 25% of each lump sum will be tax free, with the other 75% taxed as income.

Secure your financial future

For many people it is very reassuring to know that however their circumstances change, the money they’ve saved in their pension pot will be there when they retire and they won’t have to rely on the State Pension alone. The money paid into a pension is invested with the aim of making it grow so that it’s worth more when you retire. Once you reach retirement age the money is yours to use how you decide.

Automatic Enrolment

Under Automatic Enrolment almost all UK employees have the opportunity to save into a workplace pension scheme and get additional contributions from their employer and the government. As an employer you may have obligations to enrol some or all of your workers into a pension scheme and make contributions into their pension pot

How a pension scheme works

As with all pension schemes, there’s a lot of information which can be confusing. Whether you are employed, self-employed or not working, you can start saving into a pension scheme for your retirement. 

To help simplify things, we’ve broken it down into three steps:

  1. How to join a pension scheme
  2. How to contribute to your pension pot
  3. How to access your money on retirement

How to get started

If you’re ready to start saving, apply online today. Or, if you have questions or would like to chat to our expert team, contact us online, call 0151 448 5423 or email [email protected] 

Information for individualsInformation for Employers

Now is the best time to start saving.

If you have questions or would like to chat to our expert team, contact us online, call 0151 448 5423 or email [email protected]. If you’re self-employed or not working, you can apply online.

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