Personal pension plans (PPPs) and stakeholder pension schemes
(SHPs) are defined contribution
arrangements.
They are essentially investment policies that provide an income
in retirement. They are available to any UK resident and can
be bought from insurance companies, high street banks, investment
organisations and some retailers (i.e. supermarkets and high street
shops).
Policyholders contribute to their plan, the money is invested
and a fund is built up. The amount of pension payable when the
policyholder retires is dependent upon:
- the amount of money paid into the scheme;
- how well the investment funds perform; and
- the 'annuity rate' at the date of retirement. An annuity rate
is the factor used to convert the 'pot of money' into a
pension.
The policyholder can normally retire at any age after 55
(subject to plan restrictions).
When the policyholder does retire, they can generally take up to
25% of the value of their fund as a tax-free lump sum. The
remainder of the fund can be used to buy an annuity with an
insurance company.
Managing Your Money - A Health Check
Whatever the situation with your finances, it's good to know
where you stand and that you are making the most of what you have.
The health check, a new online money planner from the Money Advice
Service, is for everyone.
The Money Advice Service is independent and it's here to help
everyone understand and manage their money better.
It takes just 10 minutes to answer some straightforward
questions and the health check will give you a personalised action
plan which identifies the top three things you can do to make the
most of your money right now, and to plan for future
goals.
Best of all - it's free and it's unbiased. The Money Advice
Service won't recommend a particular product or provider or try to
sell you anything.
Click here to use the Money Advice Service
Health Check
