Private pension scheme run by insurance companies, unit trusts, building societies and banks. It aims to provide you with a pension at retirement plus other benefits. Unlike an occupational pension scheme, a personal pension plan need not be connected with a specific job.
Personal Pension Plans are designed to cater for pension planning for the self employed or employed in non-pensionable employment. Contributions made to a personal pension plan are exempt from tax at the persons highest rate of tax and the retirement age may be selected at any time from age 50 to age 75. Up to 25% of the pension fund on retirement may be taken as a tax-free cash sum and it is this tax-free sum which is used to repay the mortgage debt in the case of a Pension Mortgage.
A private pension which attracts tax relief. Understand the nature of high front-end loading charges, underperformance and the need to buy an annuity before you buy one of these.