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When it comes to planning for your future, a private pension can be a very powerful tool, giving you freedom, control, and a flexible way to build a big pot of cash for when you retire. But what actually is it, and why might it make sense for you?
Understanding Private Pensions
A private pension - sometimes called a personal pension or SIPP (Self-Invested Personal Pension) - is a type of defined contribution pension. That means the amount you’ll have in retirement depends on how much you’ve paid in and how your investments have performed over time. Unlike a workplace pension, which is set up by your employer, a private pension is one you arrange yourself. That gives you the freedom to choose your provider, how much you want to contribute, and where your money is invested (they usually allow you to invest in a larger range of investments too).
How Private Pensions Work
Setting up a private pension with Compound is quick and easy. You can get started in minutes, and if you’ve got old workplace pensions scattered around, we’ll help you find and combine them into one simple, personal pension. Once everything’s in one place, you can choose from a range of funds managed by some of the world’s leading providers, including BlackRock, Vanguard, and HSBC.
You can then make regular or one-off payments whenever it suits you, and we’ll automatically claim your tax relief from HMRC - so for every £100 you contribute, an extra £25 is added by the government. It’s a simple way to make sure your savings are working as hard as you do, while keeping everything clear, transparent, and easy to manage in one place.
When You Can Access It
You can start accessing your private pension from age 55 (rising to 57 in 2028). At that point, you can usually take up to 25% tax-free, and choose how to use the rest. Whether that’s taking flexible withdrawals, buying an annuity for a guaranteed income, or keeping it invested and drawing it down over time.
Why It Matters
A private pension can be especially useful if you’re self-employed, not enrolled in a workplace pension, or want to combine old pension pots into one simple account. It gives you control, flexibility, and of course the valuable tax advantages - helping your money work harder for your future.
Important information
The value of your pension can go down as well as up, and you may get back less than you invest. Tax treatment depends on individual circumstances and may change in the future. This content is for general information only and should not be taken as financial advice.
