personalpensions.html

Personal Pension Plans A Personal Pension Plan is an investment policy for retirement, designed to offer a lump sum and income in retirement. It is available to any United Kingdom resident who is under 75 years of age and can be bought from a number of financial institutions. Personal Pension Plans are money purchase arrangements. This means that a member contributes to the plan, the money is invested and a fund is built up. The amount of pension payable when the member retires is dependent upon: the amount of money paid into the scheme; how well the investment funds perform; and the 'annuity rate' at the date of retirement. An annuity rate is the factor used to convert the 'pot of money' into a pension. Currently the member can retire at any age between 50 and 75. From 6 April 2010, the minimum age will rise from 50 to 55. When he does retire, he can generally take up to 25% of the value of his fund as a tax-free lump sum. The remainder of his fund must be used to buy an annuity with an insurance company. Stakeholder Pension Schemes A Stakeholder Pension is a type of Personal Pension Plan (PPP). In other words, it is a money purchase arrangement designed to provide a lump sum and income in retirement. Like a PPP, it is available to any United Kingdom resident under the age of 75. As with a PPP, a major feature of this type of pension provision is that you do not have to be in employment to take one out and you can provide a Stakeholder Pension for your spouse/partner or your children. In respect of the latter, the policy reverts to the child/children at the age of 18. A Stakeholder Pension has been designed to incorporate a set of minimum standards laid down by the Government. These include: A charging structure that is capped: a maximum of 1.5% a year for the first 10 years and 1% a year thereafter Unlike many personal pensions, there can be no penalties on stopping contributions to an individual's fund or on transferring the benefits to another scheme The minimum contribution cannot be greater than £20 in any period whether regular or a one-off payment At retirement, the option exists to take a quarter of the fund as a tax-free amount Retirement age can be at anytime between the age of 50 and 75 (55 and 75 from 6 April 2010).

Pensions Advice

`Pensions Advice`