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Pensions are designed to enable you to save sufficient money during your working life to provide an income stream for you to live comfortably after you have retired.

There are many different ‘tools’ used to save for retirement, the taxation and investment elements of pensions can appear baffling. We specialise in explaining, recommending and monitoring pensions for you.

When it comes to providing for retirement too many people are doing too little too late. Putting away even a small sum early on can make a big difference to the lifestyle you will enjoy when you retire.

The golden rule for most people is to not rely on the State pension alone. Planning for your retirement is possibly the most important financial decision you will ever make. With life expectancy increasing year on year, we are now seeing the potential to spend almost as many years enjoying retirement as we have spent saving for it. Planning for it correctly will provide you with the standard of living you wish to achieve after you stop work.


A pension is a tax-efficient way to put money aside for later in life, to provide income for when you retire.

Depending on the type of pension you have, you, your employer, and other people, like your spouse or children, can all pay into it. The government also ‘contributes’ to your pension in the form of tax relief.

Then, once you turn 55 or you retire, you have a number of options for how you choose to take your pension income.

You can pay into as many pensions as you want, depending on how much you can – and want to – put aside for when you’re older. However, there are limits to how much you can contribute to your pensions each tax year, as well as over your lifetime.

It’s important to know that pensions are usually invested in stocks and shares, so the value of your pension can go down as well as up – and you may get back less than you put in. The tax treatment of your pension will depend on your individual circumstances and may change in the future.


It’s generally a good idea to pay into a pension if you can. Once you retire, or turn 55 and perhaps start working less, you’ll still need to receive an income on which to live. The sooner you start thinking about where that income is going to come from, the more prepared you’re likely to be and the better chance you’ll have of living the lifestyle you’d like to live in retirement.


While there may be other ways to save or invest, a pension provides great benefits when it comes to putting money aside for your retirement income.

  • You’ll get tax relief on the payments you make to your pension pot: the government adds 25% to any contributions you put in up to a certain limit; and, if you’re a higher or additional rate taxpayer, you can claim even more via your tax return form.

If you do not earn or indeed pay tax, you may  still be eligible to  contribute up to £3,600 per year and get the benefit of tax relief. This means that you would pay £2,880 and the Government would pay in the tax to your pension of £720,  making a total gross contribution of £3,600.

Some parents and grandparents consider setting up pensions for their children/grandchildren. The fact that this form of investment attracts tax relief and cannot be accessed (in most circumstances) until 10 years before State retirement age (currently 55), often appeals to those contributing on behalf of other people.

If you are a higher rate (40%) or additional rate (45%) tax payer, you are entitled to receive FULL tax relief on your contributions, even if when you retire, you are a lower rate or none tax payer. Basic rate tax relief is given at source and any additional relief is generally claimed via Self Assessment.

  • If you have a workplace pension, your employer is legally obliged to contribute to your pension on your behalf: not only do you receive contributions from the government in the form of tax relief, you also receive contributions from your employer. Ask your employer if you’re not sure how much they contribute to your workplace pension.

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But there’s more. Pension investments are free from income tax and capital gains tax, so you won’t pay tax on any dividends from shares and you won’t pay capital gains tax on any profits made from the investments within your pension pots. However, there are income tax implications when you start to withdraw from your pension.

Pensions are a long-term investment. You may get back less than you put in. Pensions can be and are subject to tax and regulatory change, therefore the tax treatment of pension benefits can and may change in the future.

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