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Benefits of a pension

Why should you have a pension?

The sooner you start planning for the future, the more opportunity you have to build up the funds you'll need to enjoy the retirement you want. A pension isn’t the only way to save, but it does offer you a lot of benefits that you should consider when you’re deciding on your retirement plan. Pensions are one of the most tax efficient ways to save for your retirement.

The taxman helps you save

For every £80 you pay into your pension plan, the Government currently pays in an extra £20 making your actual contribution £100. If you are a higher rate tax payer, you could claim up to an extra £20 relief through your tax return, additional rate taxpayers may be able to claim back a further £25. You must pay sufficient tax at higher or additional rate in order to receive full tax relief at that rate.

Tax-free lump sum

You can take up to 25% of your pension fund as a tax-free cash lump sum from the age of 55.  This will rise to 57 from 2028 and then will rise in line with the state Pension Age less 10 years.

Peace of mind for your family

If you die before you take your pension, your partner, or family could benefit from your fund as a lump sum or a regular pension. To avoid an unnecessary tax bill, it may be worth seeking advice on whether to put your pension fund into trust, so it’s not treated as part of your estate. Otherwise your family could possibly lose up to 40% of the value in Inheritance Tax (IHT).

You should be aware that the value of your investment and any income from it may go down as well as up and you may get back less than invested.

The tax treatment of pensions depends on individual circumstances and may be subject to change.

Talk to the experts

Our Financial Advisers* can offer expert, personalised advice to help make saving for your retirement as easy and practical as possible.


*Please note:

When you contact us we'll explain the advice services we offer and our charges. NFU Mutual Financial Advisers advise on NFU Mutual products and selected products from specialist providers.

For security and training purposes, calls may be recorded and monitored.