Beginners' guide to pensions and retirement

How pensions work

Pensions can sometimes seem a confusing subject, full of financial jargon and complicated rules. So let's start with the basics.

A pension is a tax efficient way of saving for your retirement. When you retire or reach a certain age, the pot of money you’ve saved is used to provide a taxable income until you die.

 

The current advantage of pension savings over the various other ways of saving is that you get tax relief on the money you put in – but more of that later in this guide. The exact tax benefits of a pension will depend on your personal circumstances and tax rules, both of which can change.