Private pension in the UK

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Private pension in the UK

Today I would could talk a little bit what is a private pension in the UK and and whether it is more profitable than ,,normal” standard pension. But before I begin I must emphasize here that at the age of 25 or 30, only a few young people reflect on pension in the UK. Should not we think about our future, to be able to calmly go to rest without any additional worries?

Read earlier entry about the discussion on pensions in the UK.

Pension in England and settlement of tax …

A person who is lonely and retired can receive £ 155.65 (new State Pension) or £ 119.30 (Basic State Pension), which gives a little more than £ 674 per month for the new pension. Here, assuming that the person has repaid a mortgage and there are no commitments, there are only bills, food and clothes, this amount of money may be ,,enough”. But you should be aware that after retirement you should relax, travel and explore… everyone imagines the retirement in that way – but how to do it with 674 pounds? It must be enough to seriously think about the private fund, which will allow us to breathe.

In the UK, retirement age is determined by each person individually, the minimum period of transition to private pension is 55 years. Tax relief of 20%, ie a deposit £ 80 is added by the government £ 20 for each provision of this type of deposit –  that is the way to collect the account about £ 100. Of course, payment data can be interrupted at any moment on a permanent or temporary basis and you will not held up for it any charges.

See what pension will I have, which I calculated in an article entitled: pension calculator.

Is a private pension in the UK an investment?

Pension in the UK is the investment in funds and their selection is the most important activity associated with the retirement plan. Factor of this type determines the amount of our pension in the future and most importantly – the profits from the pension fund are not taxed!

So, for example – in the case of departure from the UK or cessation of payments, there will be the same rules as if someone had stayed in the UK, and so all the collected funds are still invested. The money can be withdrawn at the earliest at the age of 55. In the event of retirement and our departure, the pension is paid in the country where we live.

You can read the entry about how to save for retirement in the UK.

What will happen to our pension in case of death?    

Well, in this case in the appropriate application, enter the person who receives the money collected in the case of our death – if no one is entered, then inheritance law decides- the money never lost. And the only thing we have is just – National Insurance Number and place of residence in the UK. It is important that we do not have the obligation of employment.

Pension in the UK and its payout options:

1). 25% of the amount from the accumulated capital is paid once, and the rest we have in the form of regular payments.

2). The second option is – cash is paid in regular payments from the accumulated fund.

The decision belongs only to us, but 25% of payment at one time is more profitable from the point of view of the tax. In this case, the amount of private pension mainly depends on

  • paid amount,
  • when it was started,
  • for what period payments were made
  • the results of investment funds.

private pension is achievableA given calculation I gave assuming that the retirement age is around at the age of 65 and an annual investment growth is 7% – because it is probably the most likely option.

A little math and summary

So, for the average person who worked in the UK for 10 years and paid only contribution to the basic system and he will want to retire after working for the next 35 years, it means that he will be entitled to a British pension of 44.47 pounds per week. Please remember to apply for a pension in the UK you are obliged to work at least 10 years.

And so it will be up to £ 192 per month. There isn’t unbelievable amount of money but it is worth to check how much it will be.

Private pension in the UK is the only provision on which we can actually put down a lot. Therefore, although we are young, we might wonder whether what we are doing is payable for us and that is worth our sacrifice and self-denial.

If your employer does not have a retirement plan, you should consider the change of work. Please read the entry where to look for work in the UK.

It is not important whether you choose a private pension fund, or take advantage of the offer of the employer, whether we put 5 percent of the so-called ,,socks „- it is important that from you should start saving from retirement from the first day.

And whether you start saving in a private pension fund? Whether you rely only on state pension so-called Basic State Pension lub new State Pension?

NOTE: I present private opinions and I am not responsible for the readers’ decisions. I always try to present current information but may no longer be up to date. Therefore, before making a decision, please verify them and consult a licensed financial adviser.


Hey! Nazywam się Radek i na codzień ciężko pracuję w Anglii i myśl, że na emeryturę będę mógł przejść dopiero po 68 latach nie jest mi na rękę. Dlatego udowodnię, że jest to możliwe w wieku 55 lat a może i wcześniej. Zobacz na tym blogu jak chcę to osiągnąć.


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