Getting clear answers to pension questions can feel complicated. Here are straightforward responses to the questions we hear most often.
1. What’s the difference between a workplace and a personal pension?
A workplace pension is arranged by your employer, while a personal pension (including SIPPs – Self-Invested Personal Pensions) is one set up by you. You can have both, and you can combine pensions into one plan if it makes sense.
2. How much tax relief do I get?
One of the main benefits of saving into a pension is the tax relief you get from the government. If you’re a basic-rate taxpayer, every £80 you contribute becomes £100. Higher-rate taxpayers can claim extra relief through their tax return.
3. How much can I pay in?
There’s no hard limit to how much you can contribute, but there’s a cap on the amount of tax relief you can get, which is called the Annual Allowance. From the 2025/26 tax year onwards, you can get tax relief on pension contributions up to £60,000 or 100% of your income each tax year, whichever is lower.
4. How much should I be paying in?
A common rule of thumb is to halve your age when you start contributing and save that percentage of your salary. So if you start at 30, aim for 15%. However, everyone's circumstances differ – this is where it’s a good idea to speak to a financial adviser.
5. When can I take my pension?
You can normally start to access your pension from age 55 (rising to 57 in 2028), though some people can take it earlier if they have a ‘protected retirement’ age or ill-health provision.
6. What's the difference between drawdown and an annuity?
Drawdown lets you keep your pension invested while taking flexible withdrawals, but your pot value can go up or down. An annuity provides guaranteed income for life, but offers less flexibility. Some people use a combination of both.
7. Is my pension taxed when I take it?
Usually, the first 25% is tax-free and the rest is taxed as income. Planning withdrawals carefully can help you manage your tax position.
8. What happens to my pension when I die?
This depends on your pension type and age at death. At the moment, most pensions can be passed to your loved ones free of Inheritance Tax (IHT), but from April 2027, unused pension funds will form part of your estate and may be subject to IHT. Always keep your nomination form up to date, as this helps make sure it’s paid to the people you want to receive it.
9. How do I keep track of my pensions?
You can request statements, use the government’s Pension Tracing Service, or consolidate pensions into one plan for easier management.
10. What is the State Pension and when can I get it?
The State Pension is a regular payment from the government, currently available from age 66 (rising to 67 between April 2026 and April 2028). The full amount requires 35 years of National Insurance contributions. You can check your State Pension forecast at gov.uk.
Remember: Pensions are personal. Reviewing your options regularly - and speaking with a financial adviser - can help make sure your retirement savings stay on track. The resources within these pages can help you find a financial adviser in your local area.
Quick recap
- Understand the type of pensions you hold and how they work together.
- Make full use of tax relief.
- Keep an eye on when and how you can access your pension.
- Check your paperwork and nominations are up to date.
- Regular reviews with an adviser can keep your plans on track.
This article reflects our understanding of current legislation, which may change. While we can provide information, we can’t give you advice and therefore we recommend you seek professional advice before making any financial decisions. Investments can go down as well as up, and you may not get back the amount invested. Tax treatment depends on individual circumstances and available reliefs may vary.