What is a pension?

Your pension pot is intended to save for your retirement and it has some amazing benefits…

Every time you add money, you’ll get a massive 25% bonus from the government. This is added to your pension pot automatically.

Technically, this is called tax relief, but we call it a bonus as it’s like free money from the government, which you’ll only get from saving into your pension.

It’s to refund tax you’ve already paid, or will pay, on your income (as pensions are tax-free). If you pay 40% tax (or 45%), you could claim some of this back too, through a Self Assessment tax return.

Also, you won’t pay any tax as your money grows – which means your money can grow much faster over time.

There is a catch however...As it’s for retirement, you won’t be able to access your money until you’re 55 (57 from 2028).

We see this as a good thing, as you won't be tempted to spend it.When you do decide to withdraw your money, Typically 25% of it will be completely tax-free. You’ll likely pay tax on the remaining 75%, depending on your total income at the time.

Each tax year, you’ll be able to save up to your yearly income (with a maximum of £60,000 per year).

Note: the government could change these tax rules in the future, and your overall tax treatment will depend on your individual circumstances.