If you’re trying to make sense of your pension options, you’re not alone. With so many different pension types, tax rules, and retirement options, planning your future can feel overwhelming. We provide independent pension advice to help you navigate every step of your journey with confidence.
In this guide, we’ll explain the main types of pensions available in the UK, when and how to use them, and why speaking to a local financial adviser can make all the difference.
What Is a Pension?
A pension is a long-term savings plan that helps you build a pot of money to use in later life. It’s designed to give you a regular income when you retire.
You can receive a pension from:
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The government (State Pension)
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Your employer (Workplace Pension)
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A private provider (Personal or Private Pension)
State Pensions
The State Pension is a government payment available to those who have built up enough National Insurance contributions over their working life.
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To qualify, you need at least 10 qualifying years of National Insurance.
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For the 2024/25 tax year, the full new State Pension is £221.20 per week
(GOV.UK – Check your forecast here).
This income forms the foundation of retirement for most people but is rarely enough on its own. That’s why exploring additional pension options is so important.
Workplace Pensions
If you’re employed, you’ll likely be enrolled into a workplace pension scheme. This is part of the government’s auto-enrolment policy.
Auto-Enrolment Explained
Since 2012, employers must automatically enrol eligible workers and contribute to their pension. Contributions usually look like this:
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Employee: 5%
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Employer: 3%
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Tax Relief: Automatically added by the government
Minimum Contribution Requirements
The minimum total contribution is 8% of your qualifying earnings — though many employers offer more generous plans.
Private Pensions
If you’re self-employed or want to take more control of your retirement savings, a private pension is worth exploring.
These are typically defined contribution pensions that you arrange yourself through a provider or platform.
What Is a SIPP?
A Self-Invested Personal Pension (SIPP) is a popular private pension that gives you more control over your investments. You can choose funds, shares, or even commercial property.
More information on SIPP’s can be found in MoneyHelper’s comprehensive guide
Tax Benefits of Private Pensions
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You receive tax relief on contributions (up to 100% of your annual earnings or £60,000, whichever is lower)
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Your investments grow tax-free
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You can take 25% as a tax-free lump sum from age 55 (rising to 57 in 2028)
Defined Benefit vs Defined Contribution: What’s the Difference?
These are two types of pension arrangements — and knowing the difference is vital.
| Feature | Defined Benefit | Defined Contribution |
|---|---|---|
| Retirement Income | Fixed, based on salary and years worked | Depends on contributions and investment growth |
| Investment Risk | Taken by employer | Taken by individual |
| Flexibility | Less flexible | More flexible with withdrawals |
Which Pension Type Is Right for You?
Most newer pensions are defined contribution, but if you work in the public sector or for a long-standing company, you may still have a defined benefit pension. These offer guaranteed income but are less common today.
You can read more about the different pension types on GOV.UK
Local Help: Pension Advice in Coventry
When it comes to pensions, local, tailored advice matters.
We offer independent pension advice in Coventry and surrounding areas. Whether you’re reviewing old pension pots, considering a transfer, or preparing to retire, our team can help you:
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Review your pension savings
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Consolidate multiple pots
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Maximise your tax efficiency
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Plan for withdrawals or annuity options
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Access your 25% tax-free lump sum strategically
Book a free consultation with a trusted financial adviser today
Your Pension Checklist
Here’s a quick list to get your retirement planning on track:
- Get your State Pension forecast
- Know which type of workplace pension you have
- Track down old pension pots
- Consider opening a private pension if you’re self-employed
- Speak to a pension adviser for personalised guidance
Final Thoughts
Whether you’re just starting to think about retirement or you’re already managing several pension pots, understanding your options is key to making informed decisions.
Looking for pension advice you can trust in Coventry?
Get in touch for clear, independent guidance.
Further Reading
MoneyHelper: What is a Pension Scheme
GOV.UK: Types of Pensions