A private pension is a popular way of saving for retirement. It's a pot of money that you and your employer pay into, and you get tax relief on your pension contributions.

You can start making pension contributions as soon as you start working and earning. But because you can't access the money until you're 55, a private pension is a great way to make sure you've got funds ready for your retirement.

When you reach 55, you'll have a choice of what to do with your private pension. You can either start drawing money from it whenever you like. Or you can choose to have it as a regular income.

As any money you put into your pension comes from your current salary in the form of pension contributions, you'll need to budget carefully. You'll want to balance making sure you still have enough disposable income now (so you don't get into debt), with securing your finances for the future.

It's a good idea to be pension wise so you can make the best choices in relation to your private pension.

If you're worried about finding the best private pension, UK wide, compare pensions using our table. Or speak to an independent pension advisor who can help.

How to choose the best pension provider

You can use our comparison to find pension providers. The pension companies we've listed let you invest in pension funds, and give you flexibility to manage them until your retirement.

When you're looking for the best private pension for you, there are a few things to look out for.

Look for a pension company that offers a low annual management charge to help save you money each year.

You should also try to find a pension that has the most funds for you to choose from.

And, finally, check you're happy with the minimum amount that the pension scheme you're looking at lets you invest.

Our comparison is a useful pension checker for you, so you can see the minimum investments needed as well as the number of funds you can choose from. It also shows you the annual fee. You can click 'view details' at the side for more information.

Watch out! Make sure you click through to check each company's website before investing. All pension providers will have their own set of charges for managing a pension fund. It's important that you know the costs.

Pension funds are investments and can go down as well as up. So, if you're not sure which to choose, it's important that you get some pension advice before you make a decision. You could use a pension calculator to help you initially, and to get a rough pensions forecast.

But, even after you've used a private pension calculator, it's still a good idea to speak to an independent pension advisor before you invest.

What private pensions can I choose from?

There are two types of private pension offered by the pension companies in our comparison.

A personal pension plan is when you appoint a pension company and they choose the funds you invest in. If you have a workplace pension, this is often how it'll work.

The other option is a self-invested personal pension (SIPP). With these, you choose where you invest, so it's a kind of 'DIY' method. There's a larger list of funds to choose from than there are with a personal pension.

If you don't want to choose your own pension funds then speak to an independent financial adviser to talk about the best pension plans for you.

Is a workplace pension and a personal pension the same?

Workplace pensions are arranged by your employer. If you're aged between 22 and state pension age, and you earn 10,000 or more, you'll be offered one.

These pension plans usually involve you making contributions from your salary. Your employer contributes to the pension too, usually paying 3-10%.

If you join one of these workplace pension schemes, you'll get a payout when you retire. The amount you get with these pension plans is based on how much you paid in and how long you paid in for. It's also affected by how much profit the provider's investments have made.

You could use a workplace pensions calculator for a very rough guide on how much you might get. This is called a pensions forecast.

A personal pension is when you appoint a pension company and they choose the funds you invest in. A workplace pension will often take the form of a personal pension.

However, even if you're not employed, you can still apply for a personal pension. This is good for self-employed people.

To get a self employed pension, you can go directly to a UK pension provider. You'll pay monthly pension contributions and they'll choose which funds you invest in.

Is there a limit on my pension contributions?

Technically there's no limit on how much money you can put into your private pension, UK wide. You can save as much as you like. But it's important to remember that there are limits on the tax relief you can get.

Pension tax relief

The UK government encourages workers to save for retirement by offering pension tax relief. It essentially acts as a bonus, as money you would otherwise have paid in tax on your earnings goes into your pension pot instead.

The tax relief you earn is equivalent to your highest rate of income tax. That means a basic rate taxpayer paying 1,000 of their salary into their pension pot would actually pay 800. The extra 200 is the money the treasury would otherwise have taken in income tax. Similarly, higher rate taxpayers would pay 600 and additional rate taxpayers 550 for 1,000 in their pension pot.

There is a limit to the amount of tax relief you can receive, though. The government caps the amount of pension contributions which can earn tax relief through the pensions annual allowance. For the 2020/21 tax year it is set at 40,000.

This means that once your pension contributions reach 40,000 in the tax year, any additional payments will be taxed at your highest rate. If you do not reach 40,000 in contributions, your unused allowance can be carried over to the next tax year. You can do this for three years, as long as you are part of a pension scheme for that period.

The limits are:

  • Earnings limit. You can get tax relief on your pension contributions up to your annual earnings

  • Annual limit. Everyone has an annual allowance on which they can get tax relief. This is currently set at 40,000 so it only really affects higher earners who can invest 40,000+ into their pension each year

  • Lifetime limit. There's a lifetime limit for how much you can get tax relief on, which is 1,073,000 as of 2020/21.

Any money you pay in, and any money your employer pays in, both count towards your allowances.

When should I start paying into a pension?

The earlier you start paying into a pension scheme, the better.

Everyone's situation is different, but the earlier you start, the more you'll save for your retirement.

If you don't start saving until you're older, you might find yourself wanting to put more away to catch up. It's better to spread the investment.

Using a pension calculator, UK residents can get a rough idea of how big their pension might be. A pension contribution calculator can show you what you might get, based on when you start saving and how much you put in.

Is your money protected in a private pension?

It depends on whether you choose a Financial Conduct Authority (FCA)-regulated private pension. If you do, then the Financial Services Compensation Scheme (FSCS) will protect the first 50,000.

Every pension company found in our private pension comparison is FCA-regulated. But not every pension scheme, UK wide is FCA-regulated. So if you find one elsewhere, be sure to check it carefully.

Can I do a pension transfer?

Yes. You might like to do a pension transfer if you've changed jobs, and your new employer uses a different pension company for their pension scheme. In this case, you can combine pensions.

Or you might need to do a pension transfer if your current pension scheme is closing, or if you've found a better deal on another private pension.

You might be charged a fee to do a pension transfer if your current pension has exit fees attached to it.

What will I get from the government pension scheme?

You can claim a state pension from the UK Government if you've been making National Insurance (NI) contributions while you're of working age.

The basic state pension scheme is for men born before 6 April 1951 and women born before 6 April 1953. It pays 125.95 per week to people who made NI contributions for 30 years or more. You make contributions if you work and pay your NI. Or you can get NI credits by being a parent/carer, or if you can't work due to unemployment or sickness. You can even pay voluntary NI contributions to make sure you qualify.

If you were born after this, you might qualify for the new state pension. You qualify in the same way, but you usually only need to make contributions for 10 years. You can get up to 164.35 per week, but it depends on how many contributions you've made.

Some people also qualify for the additional state pension. You can get this if you claim the basic state pension but you reached state pension age before 6 April 2016.

The government pension scheme payments are unlikely to be enough for you to comfortably live off. That's why it's so important to have a private pension plan as well, and start building for your future.

The average UK pension in 2017/18 was 304 a week, which includes the national pension scheme and private pension payments.*

Source: Department for Work and Pensions

Pension FAQs


How much can I pay into my pension?


As much as you like, but only the first 40,000 you pay will be tax free. Anything above this is taxed at your level of income tax.


When can I start withdrawing my pension?


Usually when you reach 55. You can contact your pension company and ask when your pension withdrawal age is at anytime.


What is a SIPP?


It is a Self Invested Personal Pension that requires you to manage and invest your pension fund without help from a financial adviser. Find out more here.


Do I need to use a financial adviser to set up a pension?


No, however you should only set up a pension if you fully understand the risks involved with managing your own investments.

About our pensions comparison


Who do we include in this comparison?


We include pension companies from our panel. They are regulated by the Financial Conduct Authority (FCA).

Here is more information about how our website works.


How do we make money from our comparison?


We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.

You do not pay any extra and the deal you get is not affected.

Last updated: 30 December 2020