Best Private Pension UK

The Best Private Pension Providers UK: A List

• Hargreaves Lansdown Private Pension
• Legal and General Private Pension
• Fidelity Private Pension
• Standard Life Private Pension
• Vanguard Private Pension

Setting up a private pension is essential to retirement planning. A private pension is a pot of money into which you can make regular contributions.

The money in your pot is used to invest in various financial products and assets.

When choosing a private pension, you must seek independent financial advice and be mindful of possible pension scams.

Best UK Private Pension Providers

Below are some of the best UK private pension scheme options to consider for your retirement needs.

However, make sure you always do thorough research before deciding on any private pension provider to ensure you understand the specific scheme’s terms and conditions and that it meets your specific needs.

The Hargreaves Lansdown Private Pension, also known as a personal pension, is a long-term investment plan designed for individuals to set up and build over their working life.

This type of pension is distinct from the State Pension or occupational schemes and is aimed at providing income for retirement or when one decides to work less.

Key aspects of the Hargreaves Lansdown Private Pension include:

• Types of Personal Pensions: There are two common types: stakeholder pensions, which are straightforward with low minimum contributions and limited investment options, and Self-Invested Personal Pensions (SIPPs), which offer a wide range of investment choices and the freedom to actively manage the portfolio.
• Contribution Limits: As a UK resident under 75, you can typically contribute as much as you earn, up to £60,000 a year, and receive tax relief. There's potential to contribute more if you have unused allowance from previous years.
• Benefits and Features: The Hargreaves Lansdown SIPP is noted for its flexibility, allowing clients to choose their own investments or select ready-made portfolios. It's also praised for being low-cost, easy to manage, and supported by a helpful, UK-based helpdesk.
• Withdrawal Rules: Funds in the personal pension are generally locked until age 55 (57 from 2028), after which you can start withdrawing money, even if still working. You can use the pension to buy an annuity or keep it invested and make withdrawals as needed. Up to 25% of the withdrawal can be tax-free.

This pension plan is suitable for individuals who wish to take control of their retirement savings, particularly those who are self-employed or want to consolidate existing pension pots.

The Legal & General Personal Pension is a flexible and tax-efficient way to save for retirement, designed for individuals either self-employed or looking to consolidate their existing pensions.

Key aspects of this pension scheme include:

• Flexibility and Tax Efficiency: You can contribute to this pension from age 18 until 75, with the option to start using the savings from 55 (57 from 2028). It's suitable for those who are self-employed or seeking to consolidate their pensions into one place.
• Investment Options: Legal & General offers five diversified fund solutions based on your risk appetite. These funds are actively managed by a team of experts. Additionally, you receive up to 25% tax relief on contributions from the government.
• Tax Benefits: The pension scheme offers tax relief on contributions, tax-efficient growth of pension funds, and the possibility of tax-free inheritance for your loved ones.
• Contribution Flexibility: You can choose to set up regular payments, pay in one-off lump sums, or adjust your regular payments according to your needs.
• Pension Transfers: Legal & General allows you to transfer other pensions into your Personal Pension. However, it's important to consider any potential exit penalties or loss of benefits from your current pension provider before transferring.
• Cancellation Policy: You have the right to cancel your pension within 30 days of setting it up, with the option to get your money back without any charges, although the return amount might be less if the fund's value has decreased.

These features make the Legal & General Personal Pension a versatile option for individuals looking to save for retirement, especially those seeking flexibility and a range of investment choices.

Fidelity Private Pension is a type of self-invested personal pension (SIPP) offered by Fidelity International.

A SIPP is a flexible and tax-efficient retirement savings plan that allows you to invest in a wide range of assets, including stocks, shares, funds, and investment trusts.

Key features of the Fidelity Private Pension:

• Flexible contribution options: You can make regular contributions to your SIPP, or you can make lump sum payments whenever you have the money.
• Wide range of investment choices: You have access to a wide range of investment options, including stocks, shares, funds, and investment trusts.
• Tax-efficient: Contributions to your SIPP are tax-deductible, and your investments grow tax-free.
• Control over your investments: You have complete control over how your investments are managed.
• Access to expert investment advice: Fidelity offers a range of investment advice services to help you make the most of your SIPP.

Online account management: You can manage your SIPP online, 24 hours a day, 7 days a week.

• Competitive charges: Fidelity charges competitive fees for its SIPP services.

Standard Life Private Pension is a type of self-invested personal pension (SIPP) offered by Standard Life.

Key features of the Standard Life Private Pension:

• Flexible contribution options: You can make regular contributions to your SIPP, or you can make lump sum payments whenever you have the money.
• Wide range of investment choices: You have access to a wide range of investment options, including stocks, shares, funds, and investment trusts.
• Tax-efficient: Contributions to your SIPP are tax-deductible, and your investments grow tax-free.
• Control over your investments: You have complete control over how your investments are managed.
• Access to expert investment advice: Standard Life offers a range of investment advice services to help you make the most of your SIPP.
• Online account management: You can manage your SIPP online, 24 hours a day, 7 days a week.
• Competitive charges: Standard Life charges competitive fees for its SIPP services.
• Award-winning customer service: Standard Life has consistently won awards for its excellent customer service.

The Vanguard Personal Pension is a type of Self Invested Personal Pension (SIPP) that offers individuals the opportunity to have control over how their pension savings are invested.

Here are some key features and aspects of the Vanguard Personal Pension:

• Control Over Investments: As a SIPP, the Vanguard Personal Pension allows you to choose and manage your own investments, providing a greater level of control compared to traditional pension schemes.
• Eligibility to Access Funds: You can start accessing your savings from the age of 55, although this age limit is set to increase to 57 from 2028.
• Transfer of Existing Pensions: Vanguard allows for the transfer of pension benefits from other UK registered pension schemes into its Personal Pension. If you already hold Vanguard funds with another provider, these can typically be transferred directly as units or shares (known as an in specie transfer).
• Flexibility: The Vanguard Personal Pension provides the flexibility expected from a SIPP, including various ways to access your funds upon retirement.
• Setting Up the Pension: To invest in Vanguard's SIPP, you first need to open an account and set up your SIPP with Vanguard. This process also allows for the movement of your personal pension to Vanguard if you wish to do so.
• Experience: Vanguard brings over 45 years of experience in the field, which can be a reassuring factor for those looking to invest in their pension scheme.

This pension plan is suitable for individuals who prefer to have a hands-on approach to their retirement savings, offering a balance of flexibility and control over investment choices. It's important to note that, like any investment, SIPPs carry risks and it's advisable to consider getting independent financial advice if you are unsure about the suitability of such an investment for your circumstances.

What Is a Private Pension?

Private pensions are a special type of savings account that allows you or your employer to save money for your retirement.

The average UK private pension is currently around £50,000, according to life insurance provider Aegon.

In the UK, there are three main types of pension:

State Pension

Paid by the government (approximately £203.85 per week at the time of writing).

You will need at least 35 years’ worth of National Insurance (NI) credits to receive the full state pension.

Otherwise, you will receive an amount based on a percentage of the number of years you have paid NI contributions.

Workplace Pension

An employer sets up this type of pension. If you are between 22 years old and State Pension age, earning a minimum annual salary of £10,000 and working in the UK, employers are usually obliged to set up a workplace pension.

You and your employer will make a small monthly contribution (usually based on a percentage of your salary), and you will generally be entitled to government contributions as tax relief.

You can opt out if you want to set up a personal pension instead.

Personal Pension

This type of pension is set up by the individual. It is often a good choice if you are looking for a self employed private pension, want to make flexible contributions or want to consolidate other pension pots.

Some personal pensions allow you to tailor your investments, which may appeal if you want to invest according to your attitude to risk.

You can usually take money out of your pension pot from age 55, although this is set to increase to 57 in April 2028.

Once you reach the minimum age, you can take up to 25% of the money in the pot as a tax-free lump sum. Usually, you will be liable to pay tax on the remaining amount.

You can withdraw the money as cash, or you can use it to buy an annuity (which will provide you with a guaranteed income for a set period), opt for drawdown (which will allow you to withdraw however much you need at any point) or opt to receive your money in instalments as regular income.

There are two main types of pension:

• Defined contribution – This type of pension pot is calculated according to how much money has been paid into the fund.
• Defined benefit – This is usually a workplace pension based on your salary and how long you have worked for your employer when you reach retirement age.

A UK private pension plan is different to the state pension, which the government contributes to.

Defined Contribution vs. Defined Benefit Pension

What Are Defined Contribution Pensions?

Usually, defined contribution pensions are personal or stakeholder pensions. People sometimes call them money purchase pension schemes.

Defined contribution pensions can be private pensions set up by the individual saver or workplace pensions arranged by their employer.

When money is saved in a defined contribution pension, it is put into shares or other investments by the pension provider.

With this in mind, it is essential to remember that the value of a defined contribution pension can rise or fall depending on investment performance.

Sometimes, defined contribution pension schemes will move your pension fund into lower-risk investments as you approach retirement age. You may wish to discuss this with your pension provider if this does not occur automatically.

What Are Defined Benefit Pension Schemes?

Defined benefit pension schemes are usually private pensions set up by an employer. Sometimes, they are referred to as final salary or career average pension schemes.

The amount you receive will vary according to the rules of the scheme. How much you get is not based on how much you have paid in or investment performance. In most cases, defined benefit pension schemes are based on your salary and how much service you have accrued with your employer.

If you choose to pay into a defined benefit pension scheme, the provider will guarantee to give you a certain amount each year following your retirement.

In most cases, you can withdraw up to 25% of your pension fund on a tax-free basis, although this is limited to 25% of the standard lifetime allowance. The date you can start accessing your pension will also depend on scheme rules, but it is usually at the age of 55 at the earliest.

According to Finder.com, in 2023 the average UK pension pot for people of retirement age is £69,481.

However, to maintain a moderate lifestyle during retirement, the average retired person outside London will need a pension income of £23,300 per year.

With hundreds of potential pension schemes on the market, choosing the best UK private pension scheme can be challenging. There is no one-size-fits-all pension pot, but it is usually best to set up a UK private pension plan to add to the income you will receive from the State Pension.

There are several factors you must consider before making a decision. Here are some tips on how to choose a private pension.

Pension Scams

Unfortunately, there are many risks when searching online for new pensions. Scammers and criminals might try to steal from your pension in several ways, leading you to lose some or all of your pension funds.

Knowing the risks and how potential scams work is a good way to avoid getting caught up in one.

With this in mind, you should always look for the following warning signs when choosing UK private pension funds.

Free Pension Reviews

These are designed to entice you to move money from your existing pension pot into a new, high-risk scheme.

Companies might even promise you a certain level of return on your investment or cash from your pension pot.

While some of these schemes are legitimate, they are risky and often poorly managed. Others are scams, which could lead to losing some or all of the money in your pension pot.

Often, they are sold as 'long-term' investments, which means several years might pass before you realise something is wrong.

Early Pension Release (Pension Liberation or Pension Loan)

If somebody says they can help you access your pension pot without tax liability by using a savings advance before you are 55, this is likely a scam. Unless you have a serious illness or have opened a particular type of pension scheme, it is only possible to access your pension pot after you reach the age of 55.

Some early-release pension schemes are illegal, particularly if you are not given full information on the amount of tax you will have to pay and the consequences of accessing your pension before the date that was agreed upon when setting up the pension.

If you go ahead with an early pension release offer, the money in your pension pot will probably be moved into an overseas scheme.

After that, you might be given a loan for about 50% of your pension, but you will be charged a hefty fee, often around 30% of the value of your pension pot.

You may even have to pay 55% tax on the amount you withdraw, even if you were unaware you were breaking the tax rules. Whatever is left will be put into high-risk investments or, in some cases, stolen from you.

Too Good to Be True

If something sounds too good to be true, it probably is. Some fraudsters claim to have information about loopholes that can help people access more than 25% of their pension pot without being liable for tax.

Others claim to offer higher returns in exchange for overseas investments. Alarm bells should start ringing if somebody offers you an advance, loan or cash back from your pension.

Creative Investments

Watch out for anybody talking about creative or one-off investments or telling you to make an on-the-spot decision about your pension. If you receive contact about your pension that you weren’t expecting, remember that it could be a fraudster or scammer.

This could happen in many forms, including telephone, email or a courier knocking on your door and asking you to sign a document. Remember, cold calling regarding pensions is illegal, so receiving a phone call about pensions you were not expecting is highly likely to be a scam.

High-Risk Investments

Usually, financial advisers will recommend that you divide your money across a range of different investment funds to lower the overall level of risk.

If somebody suggests that you should invest all of your money in a high-risk investment such as renewable energy bonds or property, this could be a scam, especially if they claim to be able to guarantee high returns on your investment.

If an FCA-approved pensions advisor suggests that you consider an early pension release scheme, ask them to set out the full risks and consequences in writing and provide information on alternative options.

In summary:

• Always reject unexpected contact or pension offers. If you receive contact out of the blue, it’s probably a scam. If you do receive an unsolicited call about your pension, you should hang up and report it to the Information Commissioner’s Office.

• Check the Financial Services Register. If you seek advice from a pensions advisor or financial advisor, always ensure they work for an FCA (Financial Conduct Authority) authorised firm. If you do not and things go wrong, you will not be able to access support from the Financial Services Compensation Scheme (FSCS) or Financial Ombudsman Service (FOS). Sometimes, scammers will pretend to be calling from an FCA-authorised firm, so make sure you only ever contact companies using the information listed for them on the FCA Register.

• Obtain impartial advice. Professional advice on pensions is not free. Several websites offer independent and impartial advice and guidance on pensions. Otherwise, you can get in touch with an accredited pensions advisor that the FCA authorises.

Frequently Asked Questions

Final Thoughts

Choosing a private pension is an important part of planning for your future retirement. Finding the right pension scheme can seem daunting at first, but with proper research, it doesn’t have to be.

In the UK, there is a choice of pension providers, all offering different products with various fees. With so many options, finding the best UK personal pension provider to suit your requirements should be possible.

Whether you are looking for a scheme with low fees, a pension with no minimum contribution or the best return on your investment, thorough research will give you the best chance of finding a product to suit you.

Before deciding, brush up on your knowledge of possible pension scams. Doing so will give you peace of mind about your finances when you reach retirement age.