Compare these private pension providers and their annual fees, and you could find a plan to help your money go further when you retire.
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Private pensions let you choose exactly how much you're putting away for retirement as well as what that cash is invested in. To open one, simply:
Select a provider
Fill out some details
Decide your contribution levels
Regularly review your investments
Pensions are long term investments. You may get back less than you originally paid in because your capital is not guaranteed and charges may apply.
There are three sorts of pension in the UK - each offering something different.
State pensions are "qualifying benefits" where what you get is based on your National Insurance contributions.
You need 10 qualifying years to be able to claim a state pension and get the full payout after 35.
State pensions are paid out weekly to people who qualify once you pass retirement age.
Currently the full new state pension pays £179.60 a week
Private pensions let you pay into a pot of money yourself, or on someone else's behalf.
The Government offers a substantial tax break for money paid into private pensions.
What you pay in and where it's invested is up to you - but you can't draw on the money until you're at least 55.
You can use the money however you like once you pass a set age.
Bosses have to enrol all staff aged between 22 and 66 who make more than £10,000 a year into pensions when they join - and top up what they save too.
The money either goes into a savings pot on your behalf or into a fund run by your employer that will pay out a set percentage of your salary in retirement.
While you'll be automatically enrolled into a pensions scheme when you join, you can opt out it if you want.
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.
Private pensions are a way of saving for retirement. They're pots of money that offer large tax breaks when you pay in, but you can't access until you're 55 (or 57 after 2028¹).
The Government adds 20% to your contributions if you're a standard rate taxpayer, 40% if you're a higher rate taxpayer and so on depending on your tax band until you hit the annual or lifetime limit.
If you don't pay income tax, you get 20% added to the first £3,600 paid in a year.
Any growth of money held in a private pension is free from income and capital gains tax.
When you access your pension, you can take 25% of your savings as a tax-free lump sum. After that, money withdrawn from pension funds is taxed the same way as income.
But be careful - once you've accessed your pension, you're only allowed to pay in £4,000 a year to get the tax benefits - something to watch out for if you're still working at the time.
There are two main types of private pension offered by the companies in our comparison service.
When you appoint a pension company and they choose the funds you invest in or give you a limited set of options. The money is put into investments (such as shares) on your behalf by the pension provider.
With these, you choose where you invest your cash, so it's a kind of 'DIY' method. There's a large list of funds, shares and other assets to choose from - and you can even buy property with it
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.
"When choosing a private pension there are two main things to look at - charges and choice.
"High fees eat into your money, making any returns you make smaller, and over time the effect on your fund can be significant.
"Choice of investments is very much a personal matter - some people value the ability to pick exactly who and what they put money into highly, others would rather let someone else do it for them."
If you make more than £10,000 a year from a single job and are aged between 22 and 66, you will be automatically enrolled into a pension at work - although you can choose to opt out.
Your workplace pension will either pay money into a pot - which then works in much the same way as a private pension - or offer you a percentage of your salary in retirement for each year you contribute.
These are known as defined contribution (where what's paid in is guaranteed) or defined benefit (where what's paid out is set at the start).
The minimum contribution is 5% of your pre-tax salary for a defined contribution scheme, to which your boss adds 3% on top. Many firms allow you to add more than yourself that as a voluntary contribution, while others will top up your money by more than 3%.
Over your career it's likely you'll build up a few of these pots. The good news is you can transfer one pension into another - either your current workplace one or a private pension - if you want to keep things simple.
|Private pension||Workplace pension|
|Choice of provider||Yes||No|
|Choice of investments||Yes||Maybe|
|Government top up||Yes||Yes|
|Employer top up||No||Yes|
The idea behind the tax break on a pension is simple - to only tax you on the money once.
So income tax is paid back on private pensions and workplace pension contributions are taken from your salary before tax is applied. Once in a pension pot, any growth in your savings is also largely tax-free².
This is designed to compensate for the fact money you take out of your pension is generally taxed as if it was paid as income by an employer that year.
However, there are limits to the tax relief on private pensions:
You can only pay in the equivalent to your annual salary in any given year - with a hard limit of £40,000 no matter what you earn
There is a lifetime limit on what you can have saved up in your pension overall and still get tax breaks on contributions - currently £1,073,100
Once you start drawing on the money you've saved into your pension, the amount you can put away each year and still get a tax break on falls to just £4,000.
There are three groups looking after money held in UK pensions:
This looks after workplace pensions in the UK - both defined contribution and defined benefit
This regulates private pension schemes including SIPPs and personal pension plans
Protects people with defined benefit pensions, and pays out instead of them if your employer goes bust
What you get back depends on the sort of pension you have and who regulates it.
SIPP holders can claim up to £85,000 back from the Financial Services Compensation Scheme if the UK-regulated provider of the investment fails.
The FSCS can also cover 100% of the loss, with no upper limit, if your pension plan is classed as a "contract of long term insurance" - as is the case with most annuities³.
With failed defined benefit schemes, the PPF steps in. It allows people already claiming their pension to continue to receive their promised payouts, while people yet to claim are offered up to 90% of their pension.
Every pension company found in our private pension comparison is FCA-regulated.
Yes. You might want to transfer your if you've changed jobs, for example, and would like to combine pensions into a single pot.
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 are allowed to transfer pensions savings between registered UK pension providers and keep all your tax-free benefits.
If you transfer your pension pot anywhere else - or take it as an unauthorised lump sum - it will be classed as "unauthorised payment" and you’ll have to pay tax on the transfer.
To transfer your pension contact your current provider and the provider you want to move your savings to. You need to check if:
Your existing scheme allows transfers out
Your new scheme will accept the transfer
However, you might need to make payments to the new scheme and be charged a fee by your existing scheme to make the transfer.
It's also possible making the switch will mean you lose the right to take your pension at a certain age or lose any rights you had to take a tax-free lump sum of more than 25%.
Your pension providers will be able to tell you if any of these will apply.
The general advice for pensions is to contribute as much as you can as early as possible. A good rule of thumb is to take your age, halve it and contribute that percentage of your income into your pension to have a comfortable retirement.
So if you're 30, then you should contribute 15% of your income to your pension.
No, however you should only set up a pension if you fully understand the risks involved with managing your own investments.
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.
See our full set of pensions guides here.
Once your workplace pension scheme is up and running the work does not stop there. Here is how to manage your pension after your staging date has passed.Read More
Before your staging date you need to work out which of your workers qualify for enrolment in a workplace pension. Here is how to approach each type of worker in your business.Read More
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Our comparison tables include providers we have commercial arrangements with. The number of listings in our tables can vary depending on the terms of those arrangements, as well as other market developments. They are all from providers regulated by the Financial Conduct Authority (FCA).
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¹The age you can access your private pension is set to rise to 57 in 2028 under current Government plans, however if your pension scheme says you can access your money at 55, you will continue to be able to do that no matter what year it happens in
²Growth in money held in a pension is free from capital gains and income tax, but dividends paid by shares held in the fund do attract a 10% tax
Last updated: 17 August 2021