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Personal pensions

A personal pension is a way of making regular savings for your retirement. You get them from pension providers, eg insurance companies and banks, who then invest your funds.

When you retire you use the fund you have built up to buy a regular pension income for the rest of your life. This is called an annuity. In some circumstances you can get part of the pension fund as a tax-free lump sum. You will receive this pension as well as any State Pension you have built up.

Should I get a personal pension?

Before you take out a personal pension plan, you should think about all the options open to you. You should consider a personal pension if you either do not have access to an occupational pension or your occupational pension doesn't suit your personal needs. You can also use a personal pension to top up the income from any other pensions you might have.

How much will I need to contribute?

The amount of money you will need to contribute will depend on the level of income you want to have in retirement and how old you are when you start contributing.

You may be surprised with how little you can start with. In most cases, you will be able to build up your contributions as you can afford to pay more.

You should remember, though, that there can be no guaranteed rate of return.

What are stakeholder pensions?

Stakeholder pensions are low-charge, flexible and portable pensions that allow you start by contributing as little as, say, £20 a month. If you like, you can build up your contributions as you can afford more.

If you have not yet made any arrangements for a second pension, a stakeholder pension may be the best option for you. But whether a stakeholder pension is right for you will depend on your circumstances. Find out more by reading, printing or ordering a copy of Stakeholder pensions - Your guide.

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How do I choose a personal pension or a stakeholder pension?

If you decide to take out a personal pension or a stakeholder pension, you should compare the different pension providers. Shop around and compare their returns and charges.

Before you buy a pension, you need to be sure that it is the right one for you - dropping out can mean that you lose much of the money you've already paid in. Look at reputation, past results and penalties for changing schemes. Some schemes, including stakeholder pensions, offer flexibility if you want a break from payments or become ill. Some also let you control where your money is invested.

See our Useful Links section for links to other websites that can help you choose a personal or stakeholder pension.

You can also go to Personal Pensions - Your Guide or Stakeholder Pensions - Your Guide for more information.

How can I track an old pension?

If you think you may have an old pension, but you are not sure of the details, the Pension Schemes Registry can usually help by tracing it for you. You can call them Monday to Friday from 9am to 5pm on 0191 225 6316.

Ok, so that's it then?

Well, not quite. Once you've sorted out your pension arrangements, don't forget about them.

Check with your scheme provider on a regular basis to make sure everything is working for you as it should. If you become better off, you may want to pay in more to build up your pension or get another policy. Check with your pension provider to see what charges are involved.

You may want contact a financial advisor, but remember, you may have to pay for this advice.

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More about personal pensions…

You can read or print a copy of Personal pensions - Your guide fron our resource centre.

More about stakeholder pensions…

Learn more about stakeholder pensions in our A-Z section

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