What is the retirement age in the UK?

Are you starting to feel the need to plan your retirement years but you’re still not sure how pensions work in the UK? First of all, let’s have a look at what a pension is and what it is for. A pension is a long-term savings scheme intended to help you put aside an amount of money to live on when you stop working. When depositing a fund on a pension trust you are basically investing in your future. A retirement fund is not like a regular savings account: in fact, some rules have been set to help provide you with an income for your non-working years. The first rule refers to the pensionable age, which in the United Kingdom has been set at 55 years old for employees and self-employed workers and at 66 for people who claim the state pension. When depositing money on your pension fund you won’t be able to access it until you reach your retirement age: this rule has been set to help you rack up a consistent amount for your future by deleting the temptation to withdraw before the time. 

What is the retirement age in the UK?
Photo by Marc Najera on Unsplash

What other rules apply to all British pension schemes?

The retirement age is a rule that applies to every pension scheme available. Whichever type of pension you choose to happen, you will never be able to withdraw your money before the time. Also, you will always be able to count on the Government contribution, which will monthly contribute to your pension through tax relief. Moreover, today British citizens are spoiled for choice when it comes to choosing the pension trust according to their needs and situation. Let’s have a look at the many options available in the United Kingdom.

The workplace pension

The workplace pension is currently one of the most common kinds of retirement scheme available for British citizens, for it is intended to help employees save for their future. By choosing this particular type of option, both you and your employer will monthly deposit a part of your salary on your pension fund. If you’re an employee, you will always be able to count on your boss’ support, for all British employers are required to contribute to their workers’ pot. The Government will contribute as well through tax relief. You should know that the money put on your fund will always be invested by the pension provider: this will give your capital a chance to grow, but will also put it at persistent risk. In fact, the sum you get will exclusively depend on how well the investments performed. This type of plan is called defined contribution pension scheme. You can also opt for the defined benefit pension scheme, which will give you access to a pre-established amount of money as soon as you reach the pensionable age, which will depend on how much you monthly put into your fund.

The private pension

The private pension has been invented to help independent workers rank up a significant amount to which they can live on when they stop working. Self-employed workers can’t obviously count on the support of their employers. By opening a private pension (also called personal pension) you can arrange yourself how much money to put in and how often. However, also in this case the amount will be invested, so the sum you’ll get once reached the retirement age will depend on the performance of the investments.

The state pension

The state pension is a particular kind of pension that will grant you access to your savings as soon as you reach the age of 66 years old. To be eligible for the state pension you have to be a woman born on or before 5 April 1953 or a man born on or before 5 April 1951. If you’re not eligible for this kind of pension you might consider the new state pension, which is available for citizens born after the set dates.



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