What is a personal pension?
A pension is a way to save and invest for retirement.
A personal pension is simply a pension that you control. You make the investment decisions and you can even bring your old pensions under one roof.
Check out our 'what is a pension' guide for more details on how personal pensions work.
Why have a personal pension?
One place for
Bring all of your pensions under one roof. Decide how your pension is invested and keep track of performance and cost.
The government is keen for us all to save more for our future, so when you add money to your pension the government will top up your contribution via tax relief.
Live the life you’d like
Having enough money in later life is not guaranteed by a workplace or government pension. A personal pension could help you save enough to retire.
Please remember, tax treatment depends on your individual circumstances and may be subject to change in future.
As a SIPP, the Freetrade pension gives you the freedom to make the most of your retirement savings.
We’ll find your old pensions for you.
Bring your old pensions under one roof.
You decide what to invest in and how much you’d like to contribute.
Before transferring your pension to Freetrade, make sure it is the right action for you to take. Some people speak to a financial advisor
to help them make this decision.
Withdrawing money from your Freetrade pension
Cash that you put in your pension is intended for retirement.
You will not be able to access money that you invest in your Freetrade pension until you’re 55 (rising to 57 in 2028), except in special circumstances, such as serious illness.
At present, Freetrade only offers a form of withdrawal called an “uncrystallised funds pension lump sum”. This is a payment taken from a pension, out of which you have not previously taken funds through another method, like a drawdown fund. This kind of withdrawal can impact the amount that you’re able to save into your pension in the future.
If you’re considering withdrawing money from your pension in the next few years, it’s important that you speak to a suitably qualified financial adviser to understand your options.
Why open a personal pension with Freetrade?
A fee that doesn’t grow with your pension pot. Your SIPP is included as part of our Plus plan for just £9.99 per month.
Combining old pensions makes it easier to keep track of investment performance and charges.
Choose from thousands of UK and US stocks, ETFs, fractional shares and more.
We don’t charge commission when you buy or sell investments. For overseas shares there will be a FX charge. Other charges may apply.
Please remember when you invest, your capital is at risk.
Tax relief on pension contributions
When you add money to your pension, the government adds money too. It does this via tax relief.
Most savers get at least 20% (basic rate income tax) in tax relief and with a SIPP, this is added directly into your account.
If you add £80 to your SIPP, we'll collect £20 (i.e 20% tax relief) from the government and add it into your Freetrade SIPP account. Making your total pension contribution £100.
If your tax rate is more than the basic rate of tax you can claim further tax relief yourself.
You can put up to 100% of your salary in a pension and get tax relief on it but if you put more than the Annual Allowance (currently £40,000) there's no tax relief. You’ll also face a tax charge.
Please remember, any tax treatment depends on your individual circumstances and may be subject to change in future.
Anyone under the age of 75 in the UK can have a personal pension.
In a pension, your investments grow tax-free.
You can’t access money paid into a pension until you reach age 55 (or 57 from 6 April 2028).
Pension and tax rules can change and tax relief depends on your circumstances.
What can I invest in?
See which are the most traded shares by the total value of buy orders over the past week on the Freetrade app.
US, UK and European stocks
Invest in thousands of companies listed on the LSE, NYSE, NASDAQ and across Europe.
Choose from a wide range of exchange-traded funds covering index funds, stock and bond ETFs from providers like Vanguard, iShares and Invesco, as well as HSBC and Xtrackers.
Diversify your investments with REITs, which allow you to add residential or commercial real estate assets to your portfolio without the hassle of buying and managing the properties yourself.
Choose from over 150 investment trusts to diversify your portfolio across a wide range of sectors, geographical areas and markets worldwide.
A pension is a long-term tax-efficient savings account.
Long-term because you are saving for later life and can’t access it until you are at least 55 years old (or in 2028 that rises to 57).
Tax-efficient because you get tax relief on contributions, investments grow tax-free in a pension and when you retire you can take a portion of your personal pension tax-free.
Personal pensions are a useful way to save because by investing regular sums over your working life the aim is to build up a pension pot that you can live off in the future.
How your pension works will depend on which one you have. Here are a few simple things to remember about personal pensions:
- The aim is to build a pension pot of money you can live from later in life
- The government tops up your contribution through tax relief
- The earlier you start investing even small sums regularly the longer your investments will have to grow
There are three types of pensions in the UK: the state pension, workplace pensions and personal pensions.
The state pension is run by the government. You get it when you reach the state pension age and if you meet the necessary criteria like having the required number of national insurance contributions.
There are two types of workplace pensions: defined benefit (DB) and defined contribution (DC). DB schemes (also known as final salary schemes) are rarer these days, it’s much more likely you will be enrolled into DC schemes. DC schemes are where you and your employer both contribute to a pension pot.
There are a few types of personal pensions. Personal and stakeholder pensions tend to offer a restricted set of investment options but a self-invested personal pension (SIPP) offers a much wider investment choice.
There are a few key differences between personal and workplace pensions. But one of the most important things to remember is that you can have both.
Set up and controlled by you
You decide how much to invest and what to invest in
Tax relief is awarded ‘at source’ which means you pay 80% of the total contribution you’d like and the government adds the remaining 20%
Set up and controlled by your employer
You may be able to choose what your pension is invested in
There’s a minimum contribution level set at 8% of your salary, your employer must pay at least 3% of this
Tax relief is awarded either by ‘relief at source’ or by ‘net pay method’
You can put up to 100% of your salary in a personal pension and get tax relief but if you put more than the Annual Allowance (currently £40,000) you'll face a tax charge. The annual allowance covers all pension contributions to any pension scheme, so both yours and your employer’s.
If you’re a higher earner, with an annual income of over £200,000 a year, you’ll likely have a lower annual allowance, known as the ‘tapered annual allowance’, which could be as low as £4,000.
If you don’t have a UK income or earn less than £3,600 a year, you can still contribute to a pension but the most you can put in and get tax relief on is £2,880 a year (that’s £3,600 after tax relief has been added).
If you’ve already started taking money from a defined contribution pension pot (this could be a personal or a workplace pension) you may have triggered the Money Purchase Annual Allowance (MPAA). If you have then you will receive a tax charge on any contributions above £4,000 per year to a defined contribution pension pot.
There are many reasons why people chose to switch pension providers. It could be you are changing jobs, you’ve found a better value provider or you’d like to bring old pensions together in one place.
Before starting any transfers it’s important to understand if you’ll be better off or not by transferring.
Any difference in ongoing costs
Whether you’ll lose any benefits your current scheme offers like guarantees (which offer you a certain guaranteed income for life)
If you’ll be charged anything for leaving your current provider
If you've forgotten what pensions you have, our guide to finding old pensions can help you trace them.
Generally, personal or private pensions come under the Financial Services Compensation Scheme (FSCS) which protects your assets in the event of the provider failing or failing to protect your assets. To be certain you will have to check directly with your current pension provider or the FSCS directly.
Your Freetrade Pension is part of the FSCS scheme and that means the value of your assets held with Freetrade is protected by the FSCS up to a maximum of £85,000.
Remember though, any investment can fall as well as rise due to movements in market prices and any such fall wouldn't be covered by the FSCS.
Have questions? Email us at firstname.lastname@example.org or reach out via in-app chat.
SIPPs are a pension product designed for people who want to make their own investment decisions. You can normally only access the money from age 55 (raising to 57 from 2028). Current rules can change, and tax relief depends on your personal circumstances.
When you invest, your capital is at risk. The value of your portfolio can go down as well as up and you may get back less than you invest.
Before transferring a pension you should ensure that this is the right thing for you to do and in particular you will not lose valuable guarantees or incur excessive transfer penalties. Pensions are usually transferred as cash so you will be out of the market for a period and therefore there is a risk you may lose out on investment gains during this period.
Freetrade does not currently offer drawdown products for our SIPP.
The fees displayed on this page do not include any fees which may be charged by product manufacturers (e.g. ETF management fees).
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