Which pensions explained

A pension is a tax-efficient way to put money aside for later in life, to provide income for when you retire. Depending on the type of pension you have, you, your employer, and other people, like your spouse or children, can all pay into it. Then, once you turn 55 or you retire, you have a number of options for how you choose to take your pension income.

However, there are limits to how much you can contribute to your pensions each tax year, as well as over your lifetime. Find out how much you can pay into your pension. The tax treatment of your pension will depend on your individual circumstances and may change in the future. How a pension works will depend on what kind of pension you have. However, in really simple terms, there are three key things to know about how a pension works:.

While there may be other ways to save or invest, a pension provides great benefits when it comes to putting money aside for your retirement income.

However, there are income tax implications when you start to withdraw from your pension. There are three types of pension in the UK: the workplace pension, the personal pension and the state pension. The type of pension you have will depend on your personal circumstances. Workplace pensions, which are also known as company pensions and occupational pensions, are offered by employers. Nowadays, employers in the UK are required to have a pension scheme set up and they must automatically enrol their eligible employees.

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