Definitions for "Personal pension"
Keywords:  pension, july, retire, annuity, scheme
Self-employed people or people who are not in an occupational pension scheme can take out these pensions.
Established under the Social Security Act 1986, personal pensions allow individuals to make their own provision for an income in retirement. Tax relief is allowable on the contributions at the investor's highest marginal tax rate. Investments grow free of all taxes to create a fund to be used at retirement to purchase an annuity. Up to 25% of the fund may be taken, as tax-free cash and the balance must be used to purchase an annuity. Alternatively, from July 1995 the balance may be used in an income withdrawal annuity arrangement.
A structured personal savings and investment plan to provide for your financial needs after you retire. You can use some or all of the proceeds from a personal pension to pay off an interest-only mortgage. You will need to arrange life assurance separately to a personal pension.