Investing & Pensions
Personal Pensions
A personal pension is one you set up yourself, rather than through an employer — useful if you are self-employed or want to save more for retirement. Contributions are invested and boosted by tax relief.
Key information
- You choose the provider and pay in yourself, with tax relief added
- The annual allowance is £60,000 for most people in 2026/27
- The invested pot can rise and fall in value — capital is at risk
- You can normally access it from age 55 (rising to 57 in April 2028)
On this page
What a personal pension is
A personal pension is a defined contribution pension you arrange directly with a provider. You pay in, the money is invested, and the size of your eventual pot depends on how much goes in, how the investments perform, and the charges deducted. A self-invested personal pension (SIPP) is a type that gives you a wider choice of investments to manage yourself.
Because the money is invested, the value can go down as well as up, and there is no guaranteed amount at the end. Charges vary between providers and reduce your returns over time, so they are worth comparing.
Tax relief and the annual allowance
The Government adds tax relief to personal pension contributions, which is a significant boost to your saving. For the 2026/27 tax year, the annual allowance — the most you can normally pay into all your pensions each year while still getting tax relief — is £60,000, or 100% of your earnings if lower.
High earners may have a lower, "tapered" allowance if their income is above set thresholds (adjusted income over £260,000), and a reduced money purchase annual allowance of £10,000 applies once you have flexibly accessed a defined contribution pension. Because these rules are complex, check your position or take regulated advice before making large contributions.
When you can take your money
You can normally start taking money from a personal pension from age 55. This minimum age is due to rise to 57 from 6 April 2028. You can usually take up to 25% of the pot as a tax-free lump sum, with the rest taxed as income when you draw it.
How you take an income — for example through drawdown or by buying an annuity — is an important decision with lasting consequences. The Government’s free Pension Wise service offers guidance to over-50s, and regulated advice can help you choose what suits you. Our guide to pension drawdown and annuities explains the main options.
Your rights & protection
- Personal pension providers must be authorised by the FCA — check the firm on the FCA Register before you invest.
- Over-50s with a defined contribution pension are entitled to free, impartial guidance from Pension Wise (part of MoneyHelper).
- You can complain to your provider and escalate free of charge to the Financial Ombudsman Service if a problem is not resolved.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- GOV.UK, Tax on your private pension contributions — annual allowance (opens in a new tab). Accessed 22 Aug 2026.
- MoneyHelper, Personal pensions (opens in a new tab). Accessed 22 Aug 2026.