Pension Investment

Specialist savings accounts aimed at enabling you to save for your retirement are widely available. The offers are diverse and some will involve less risk to your savings than others. They are designed to be long-term investments to be drawn either upon reaching state retirement age, currently age sixty for women and sixty-five for men, or at age fifty in the case of private pension schemes (age fifty-five from April 2010). Once savings are invested in a pension scheme, they cannot be withdrawn or usually even transferred without extra charges and penalties, although transfer of the whole pension plan to another provider may be free of charge depending on the financial institutions involved.

If you belong to a pension scheme which invests your savings, such as a money purchase scheme, there is a risk that the value of your pension fund when you reach retirement could be less than the amount you have invested. However, pension savings schemes offer many advantages such as tax benefits. At pensionable age, up to twenty-five percent of your pension fund can be taken as a tax-free cash lump sum and the remainder is then used to purchase an annuity which is generally a guaranteed income until death. You may also have the opportunity to invest in an occupational pension, which guarantees you a certain annual income when you reach retirement, payable until your death.

For advice on specific aspects of pension savings accounts, speak to an advisor at your bank or contact your local Citizens Advice Bureau. See also the section on Pensions for more details.