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Know your Pension!

A personal pension is a pension that you arrange yourself. These can also sometimes be known as a defined contribution, or ‘money purchase’ pension. These types of pensions are based on how much was paid in.

1. How does this work?

The money you pay into your personal pension is then put into investments (such as shares) by the pension provider, of your choice. The money you’ll get from a personal pension when you retire will depend on the following;

1. how much has been paid in

2. how the fund’s investments have performed – these can go up or down

3. how you decide to take your money

There are different types of personal pension, that you can choose from. At Financial Foresight our specialist advisers will look at your aims and needs and then conclude what will be the best one for you. With most pensions you will be able to make regular or individual lump sum payments to a pension provider, up until your intended retirement date. You will receive annual statements, telling you how much your fund is worth, this will enable you to keep on top of your pension.

You may also get some sort of tax relief on what you pay into your pension. To find out more about your potential pension option, speak to one of our specialist pension advisers today.


2. When can you take your pension?


Most personal pensions are set to the age you want to retire at, to start taking money from them, this is not normally before age 55.

 
You can take up to 25% of the money built up in your pension as a tax–free lump sum. You’ll then have 6 months to start taking the remaining 75%, which you’ll usually pay tax on.

You will then have a few options for the remaining 75% of your pension pot:

1. taking all or some of it as cash

2. buying a product that gives you a guaranteed income (sometimes known as an ‘annuity’) for life

3. investing it to get a regular, adjustable income (sometimes known as ‘flexi–access draw–down’)

Speak to us today to find out what the range of pension providers will offer (they may not offer all of them), so it is vital to seek Independent Financial Adviser from one of our advisers today to ensure your retirement is protected .

3. Invest the money in a drawdown fund

You may have the option to invest your pension pot in a flexi–access drawdown fund.

From a flexi–access drawdown fund you can do the following:

1. Make withdrawals

2. Buy a short–term annuity – this will give you regular payments for up to 5 years

3. Pay in – but be aware you’ll pay 

4. Cap your draw–down fund – your money will stay invested.


4. Withdraw your cash from your pension pot?

You can keep withdrawing and paying in. Be aware the pension provider you choose set a maximum amount you can take out every year. This limit will be reviewed every 3 years until you turn 75, then every year after that.

For more information on our potential pension need, give us a call on 028 9332 2822 or email simon@financialforesight.co.uk

Source: https://www.gov.uk/personal-pensions-your-rights

 
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