Which pensions do you have?
There are a few different types of pensions in the UK. But the main ones you need to know about are workplace pensions, personal pensions and the state pension.
When it comes to understanding which pensions you might have, the answer could be all of them.
But for each type of pension, how they work, what you get and when you get it, is different.
Before diving in it’s important to know that pension and tax rules can change and depend on your personal circumstances. So before making any decisions, check how anything mentioned below will apply to you.
Main types of pension
Here’s a brief summary of the main pension types, breaking down how they work, what you get and when you get it.
If you need to review the basics, check our guide on what is a pension.
Personal pension - a pension pot you build yourself
You are in charge of setting up a personal pension and adding money to it. The government tops up your contributions, up to a certain amount, through tax relief.
The main reasons people set up personal pensions are to:
- Save more and supplement a workplace or the state pension
- Start saving for retirement if self-employed
- Combine old pensions and keep them under one roof
- Make their own investment decisions
| Personal pensions
|What is it?
|| A pension pot you build yourself
|Types of personal pension
||SIPP (self-invested personal pension)
|How does it work?
Personal pension plans tend to have restricted investment options that you choose from. Each ready-made portfolio is designed with a specific investment goal.
For instance, this could be a portfolio of sustainability focussed investments, or one tailored to a specific retirement date.
You or perhaps your financial advisor will choose your portfolio, but a fund manager is in charge of what goes in it.
Stakeholder pension plans work in a similar way to personal pensions but they also have to meet certain criteria set out by the government.
The criteria include things like cost limits and a minimum contributions level.
You or a financial advisor will choose your portfolio but a fund manager is in charge of what investments go in it.
SIPPs tend to offer a wider choice of investment options.
You control what your pension is invested in.
You can build your own portfolio of stocks or other assets. But you can also select ready-made investment options too, like ETFs and investment trusts.
You can also keep a closer eye on fees - knowing exactly what you're paying and why.
|What do you get?
|| How much you get all depends on what you have contributed over time and how well your investments have performed.
|When do you get it?
You can’t access money paid into a personal pension until you reach age 55 (or 57 from
6 April 2028)