Although people are living longer, most of us are not saving enough for retirement 

At tba Wealth Management we encourage all our clients to keep a long term focus on their retirement plans and fund their pensions accordingly

Understanding Pensions

A pension is simply a method of saving for retirement. What makes it different from other methods of saving is the tax advantages offered by the Government to encourage individuals and companies to make provision for retirement.

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Why Pensions Matter

Planning for retirement has never been more crucial. Demographic trends in the UK show people are living longer while the working population is reducing. This puts an ever-increasing strain on the State Pension and an ever-increasing importance on private pension provision.

Types of Pensions 

There are several types of pensions, each with its own set of rules and benefits:

State  Pensions 

Provided  by  the  government,  paid  out  when  you  reach  State  Pension  age  (currently  66).  

The  amount  received  is  based  on  your  National  Insurance  contributions. 

Workplace  Pensions

Set  up  by  employers,  both  you  and  your  employer  contribute  a  percentage  which  is  taken  directly  from  your  wages  each  month.

You  may  be  entitled to  tax  relief. 

Personal   Pensions

Private  pensions  that  you  set  up  and  manage  yourself.  Payments  can  be  regular  or  one  off  lump sums.

You  may  be  entitled to  tax  relief.   

Maximizing Your Pension

Having a pension is just the first step in planning for retirement but here are some tips to maximise your pension benefits:

  • Start saving early 
  • Contribute regularly 
  • Take advantage of tax benefits 
  • Consider additional voluntary contributions

What are my options at retirement?

There are a number of options available once you reach your chosen retirement age, some of the more common options are listed below:

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Drawdown allows the pension member to take an income directly from their defined contribution fund, such as a personal pension or workplace pension.  

There is currently only one method of drawdown available to pension members: flexi-access drawdown (FAD). However, in the past, members have been able to opt for capped drawdown or flexible drawdown.
Members can ‘crystallise’ some, or all, of their pension fund into drawdown once they have reached age 55 (57 from 2028). With each crystallisation, the member can typically access 25% of the money drawn down as a tax-free lump sum, with the remaining 75% taxed at their marginal rate of income tax. 

Uncrystallised funds pension lump sum (UFPLS)

An UFPLS is a lump sum that is taken from a defined contribution fund from which benefits are yet to be taken, known as the ‘uncrystallised’ fund.  

Typically, up to 25% of the UFPLS can be tax-free with the balance subject to the pension member’s marginal rate of income tax.
The member can take either the whole fund as an UFPLS, or just a portion of the fund. This enables a degree of control with regards to tax planning in retirement.

Lifetime annuity

Lifetime annuities allow a pension member to use their pension funds to purchase a contract from an insurance company. The insurance company will provide the member an income for life in exchange for some, or all, of the pension fund.

Lifetime annuities have the benefit of securing an income for life, giving annuitants comfort in that they are guaranteed a pre-specified level of income each year. However, a drawback is that lifetime annuities can be inflexible after inception.


The pension options listed above are not exhaustive and the specific options available to you will depend upon individual circumstances.

This provides basic information surrounding some of the pension options available to members of a registered pension scheme in the UK. It should not be considered financial advice. For financial advice, you should contact one of our financial advisors here.
The information on this page is based on our understanding of current UK legislation. Levels of taxation will depend upon individual circumstances and may be subject to change in the future. 

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