Saving for retirement is one of the smartest moves you can make for your future self. But if you’re self-employed, between jobs, or simply don’t have a workplace pension ready and waiting, it can feel tricky to know where to begin.
That’s where personal pensions come in - flexible, private retirement plans you set up yourself. They give you control over how much you save, where your money is invested, and how your future income grows.
In this short guide, we’ll break everything down in plain English so you can get confident, take action, and start building a pension pot that works for you.
A personal pension is a private pension you arrange yourself. You choose:
They’re ideal for people who don’t have access to a workplace pension - including freelancers, contractors, sole traders and anyone between jobs. They also work well for people who already have a workplace pension but want to top up or diversify their retirement savings.
Personal pensions put you in the driver’s seat: you decide what goes in, how it grows, and how it supports your long-term plans.
If you’re self-employed, no one is setting up a pension for you. A personal pension is your route to long-term financial security - with powerful tax benefits too.
You automatically receive 20% tax relief on contributions.
Higher-rate taxpayers can claim even more through their tax return.
You choose your contribution level and adjust it any time.
You choose how hands-on you want to be with investing.
Even if you already have a workplace pension, a personal pension helps spread risk and create more retirement income options.
Thanks to compounding and tax relief, even small, regular contributions add up meaningfully over time.
There’s no one-size-fits-all approach. Different types suit different comfort levels, goals and experience.
Best if you want simplicity without needing to choose every investment yourself.
Designed to be flexible and accessible - great for beginners.
Perfect for people who feel confident managing their own investments.
You can pay into a personal pension regularly (e.g., monthly) or through one-off top-ups.
You can contribute up to £60,000 per year (2024/25), or 100% of your earnings - whichever is lower.
If you haven’t used your full allowance in the past three tax years, you may be able to “carry forward” unused amounts to contribute more without triggering a tax charge.
This makes personal pensions one of the most tax-efficient ways to save.
From age 55 (rising to 57 in 2028), you can access your pot.|
Usually, you can take 25% tax-free. The rest is taxed as income when you withdraw it.
You can choose whether to take lump sums, buy an annuity, or draw down gradually.
An annuity is like turning your pension pot into a guaranteed income.
You hand your pension savings to an insurance provider, and in return, they pay you a fixed income - often for the rest of your life.
Great for people who value certainty and want to reduce the risk of running out of money later in life.
A personal pension gives you freedom and responsibility in equal measure. Whether you’re starting from scratch or adding to existing retirement savings, taking time to understand your options is one of the most valuable steps you can take.
Small, consistent contributions - boosted by tax relief - can transform your future. The sooner you start, the more your future self will thank you.
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