Main heading

Personal Pensions

You can choose to take out a Personal Pension through an insurance company, bank, building society, unit trust or friendly society. The money you pay during your working life into your Personal Pension is invested to build up cash fund at retirement which is used to buy a pension.

If you decide to pay into Personal Pension instead of the LGPS you will pay the full rate of National Insurance contributions. Payments to a Personal Pension will attract tax relief but these payments cannot be deducted by your payroll department, and your employer will not normally pay towards such a policy.

Be aware that commission and administration charges will reduce the amount actually invested to provide towards your pension. These costs can vary from company to company but can be considerable.

The Cost of Purchasing a Personal Pension

Contributions vary drastically depending on the level of retirement benefits required. The lower the contributions the lower the retirement benefits, so you need to make sure from the start of contributing that you have some idea of the level of benefits you aiming for at retirement. Personal Pension providers will give you projected estimates of benefits and the level of annual growth in order to achieve these benefits.

Summary

	Local Government Pension Scheme	Personal Pension	State Pension
Inflation Proof Pension	Yes	At Extra Cost	Yes
Tax Free Pensions	Yes	Yes	No
Redundancy Benefits	Yes	At Extra Cost	N/A
Statutory Benefits	Yes	No	Yes
Benefit Level Guaranteed	Yes	No	Yes
Flexible Retirement Age	Yes	Yes	No
Death Benefits/Life Assurance	Yes	At Extra Cost	N/A
Spouse/Civil Partner Benefits	Yes	At Extra Cost	Yes
Children's Benefits	Yes	At Extra Cost	No
Ill Health Benefits	Yes	At Extra Cost	No
Flexible Contributions	Yes	Yes	No