A personal pension is a private pension that you arrange yourself.

With a personal pension plan, you appoint a pension company to manage your pension for you. The pension company chooses the funds you invest in.

If you don't have a workplace pension, a personal pension could be a good way of saving for your retirement. Sometimes, the pensions offered by employers happen to be personal pensions - this is called a group personal pension. But you can get a personal pension, UK wide, whether you're an employee or not.

Are personal pension plans worth it?

If you want a private pension but you don't want to choose all of the investments yourself, then a personal pension plan could be the right choice for you.

A personal pension might be a good idea if you don't have the option to save into a workplace pension. You can build a retirement income, and get personal pension tax relief on your personal pension contributions.

Personal pensions are tax efficient. Personal pension providers claim private pension tax relief and add it to your pension pot. But if you're a higher rate tax payer, you'll need to claim the additional rebate through your tax return.

If you're interested in setting up a private pension, speak to an independent financial adviser to get some private pension advice. You can discuss your retirement options if you're unsure what type of private pension scheme to invest in.

Does it matter how many funds you choose?

Why choose a personal pension plan?

There are three main reasons to invest in a personal pension scheme:

  1. You're not eligible for a workplace pension

  2. You need a private pension for self employed people

  3. You want to save into a private pension plan, separate to your workplace pension.

Before you look into personal pension providers and start a private pension, make sure you do your research. You need to understand the risks of investing in a personal pension plan. Whichever personal pension you choose, remember that the value of your private pension fund could go up or down.

Picking the best private pension companies and the best private pensions


Our comparison lets you find the best personal pension companies by comparing:

  • How much they charge you in annual fees

  • The number of funds they let you choose from

  • How much they let you invest.

Then click 'view details' to find out more. There are lots of other charges that might apply when managing your own pension. So it's a good idea to click through to each company's website to get more details. Then you can compare these other costs from all the private pension companies before you invest.

If you're trying to find the best private pension scheme, UK wide, for your needs, our private pension comparison above is a good place to start. But you might like to get some private pension advice from an independent financial adviser too.

Are personal pensions better than workplace pensions?

The success of any pension depends on the funds you choose.

The risk, with any investment, is that your money could go down as well as up. That's the case whatever type of pension you save into, whether it's a personal pension or a workplace pension.

There are ways you could benefit by saving into a workplace pension rather than a personal pension plan.

For example, with a workplace pension, you might get employer contributions. That's when your employer also pays into your pension. This is like getting free money in your pension fund.

You might also benefit from no charges, or small charges. If your employer's arranging pensions for a large group of people, it's likely they'll get a good deal. This might mean you don't need to pay any fees for savings towards your retirement.

Some workplaces do offer group personal pension plans.

But one of the big benefits of personal pensions is that you don't have to be employed to have one. Finding the best personal pension for self-employed people is an important step in saving for retirement. This is because you don't have a workplace that will auto-enrol you into their private pension scheme.

How a personal pension scheme works

Usually, the pension fund is invested in stocks and shares. The aim is to grow your pension fund before you retire.

When you retire, you can start claiming your pension. You could have it as a regular payment, or as a lump sum.

Can you withdraw money from a private pension?

In 2015, there were changes to the private pension rules. This means there's now more choice and flexibility than ever when it comes to your private pension. This applies to how you take the money out and when you take it out.

The private pension age is 55. So when you reach 55, you can start drawing money from your personal pension whenever you like. Or you can choose to have it as a regular income. You might prefer to wait until you retire to start taking money out.

How much will I get from my private pension scheme when I retire?

The size of your pension pot when you retire depends on several factors. These include:

  • How long you've been making private pension contributions for

  • How much you've paid into your pension in that time

  • The performance of your investments

  • Whether you have an employer who's been making contributions too

  • How much you have to pay in charges (all private pension providers are different).

You could use a private pension calculator to get a rough idea of how much you might have.

But remember that a personal pension calculator will only ever give an estimate. Even the best personal pension plans might underperform. A private pension calculator can't possibly know how well your funds will perform, and the size of your pension pot can be affected by this.

What types of personal pension schemes are there?

The most common types of personal pension are where personal pension providers choose the funds you invest in. If you're using a group personal pension plan or have a workplace pension, this tends to be how it works.

This is the most popular type of personal pension because you don't have to make your own financial decisions about where to invest your funds.

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 about the best personal pension plans for you.

What are the pros and cons of a personal pension?

Personal pensions come with lots of benefits. These include:

  • They're good for people who can't get a workplace pension

  • You'll get tax relief

  • You'll get a tax-free lump sum or regular payment when you reach 55 or retire

  • They're quite portable, so if your situation changes you can usually carry on making personal pension contributions.

The main cons of a personal pension:

  • You don't usually get employer contributions

  • Management charges are usually higher than with workplace pensions

  • You don't know how your investments will perform so funds could go up or down.

Personal pension plan FAQs

Q

Who is responsible for the performance of my personal pension?

A

You are, so if you are not sure how to manage it, speak to an independent financial adviser.

Q

When can I withdraw my personal pension plan?

A

Usually when you reach 55, but check with your pension company as their terms and conditions may set a different age.

Q

How much can I pay into my pension?

A

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.

Q

When can I start withdrawing my pension?

A

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

About our personal pension plans comparison

Q

Who do we include in this comparison?

A

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

Here is more information about how our website works.

Q

How do we make money from our comparison?

A

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.