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You will also benefit from employers paying into your pot. Current rules dictate that employers must contribute at least 3pc of your salary, and in many cases your workplace will match your own contribution. This means that the cash in your pension could effectively double, growth further with income tax relief (which is claimed on your behalf) even before you enjoy any investment gains.
There is one more tax-free element – you can take a quarter of your pension completely tax-free once you hit the “normal minimum pension age”. This is currently set at 55, but is scheduled to increase to 57 by 2028, and could then soon after rise to 58 to follow any further state pension age increase.
Most people do not choose their pension provider, as they automatically join the scheme that their employer has already chosen. Some of the largest are Fidelity, Legal & General, Now: Pensions, Nest, Aviva, and The People’s Pension.
If you do not make an active decision about where your money is invested, your pension will be invested in a “default” fund. The returns your savings achieve will vary according to your age, as the professional investor managing your funds will generally take more risk with your money if you are younger.
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