Personal pension is a form of retirement benefit that is normally available to individuals that are 18 years old, and its benefits can be acquired anytime from 55 years old. It is the best choice for you if:
- You are self-employed
- You only have a modest amount of income
- Your employer does not give any company pension scheme
- You have the option of paying into a company pension, but you choose not to; or
- You are unemployed but you can afford paying a plan.
It is a very advantageous type of pension because of your chances of saving while investing on your future. Saving while investing is possible through personal pension, because for an amount you contribute on your pension scheme, a normal rate of 20 per cent is claimed as tax back by the provider from the government.
So in other words, if you pay at a higher tax rate, let us say at 40 per cent, you can get 40 per cent tax relief on your contributions. And if you are at a tax rate of 50 per cent, you have a tax relief on your contribution of 50 per cent.
And another good thing is even if you don’t pay tax, you can still avail the basic rate of 20 per cent tax relief.