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Retirement:
Pensions you arrange yourself

Pensions you arrange yourself are any pension arrangements outside the state pension or an employer�s pension scheme. They are generally called personal pensions. Personal pensions are money purchase schemes and the pension benefits you receive at retirement will depend on how much you have paid into the pension and how those funds have grown up to your retirement date.

Stakeholder pensions were introduced in April 2001 and are a particular form of personal pension. Although the same tax rules and limits to contributions and benefits apply to stakeholder pensions as to other personal pensions, there are restrictions on how the pension fund is managed, particularly in terms of costs. They were intended as a low cost form of personal pension to encourage people who perhaps had no pension arrangements in place to start saving for their retirement.

Another, older, form of pension you arrange yourself is a Retirement Annuity Policy. These were available until 1 July 1988 and had more generous limits on contributions and benefits than personal pensions although they are subject to greater restrictions on your retirement age and your employer cannot contribute to them (unlike personal pensions). If you have a retirement annuity policy you can continue to make contributions but no new retirement annuity policies can be taken out.

A variation on the standard personal pension is a Self Invested Personal Pension (SIPP) which was introduced in 1989. As the name suggests in this type of personal pension gives you control over the investment decisions made for the pension fund instead of relying on the pension provider to make the investment decisions.

Almost anyone can have a personal pension:

If you are employed you can have a personal or stakeholder pension in addition to being in your employer�s pension scheme subject to certain conditions. If you are not in your employer�s scheme these conditions do not apply.

If you are self employed you can have a personal or stakeholder pension.

If you are neither employed nor self employed you can have a stakeholder pension and contribute up to �3,600 a year.

You can contribute to as many personal and / or stakeholder pensions as you wish at any one time subject to the limits on contributions which apply to you as an individual not to each pension scheme. You can only use one pension scheme for the purpose of contracting out of the additional state pension at any time.

Select from the options below for more information on the type of pension: