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One or More Pension?

The Basic State Pension is the one we're all probably most familiar with, and the one which most people in the UK are eligible for. You qualify for it through the payment of National Insurance Contributions you've made throughout your working life.

But there are many other types of pensions available to you - and they will provide you with an additional income, and therefore a more comfortable retirement than the current State Pension will provide on its own.

You can have as many personal pensions as you like provided that added together all your payments / contributions do not exceed your tax break limits, i.e. you cannot claim tax breaks on more than 17.5% of you income if you are under 35, and so on. This means the limit you can pay into pension each year is based on you and your employer's total contributions into all of your policies. All the contributions you personally make are eligible for tax relief up to the amount of your annual salary or the "annual allowance”, whichever is the smaller. That means you could contribute the equivalent of your whole salary into pension plans if you had the capital to do so.

If you have more than one pension, is there more than one fee?
One thing to consider when taking out another pension is that most providers will charge an annual fee. If you have more than one pension, you'll have more than one charge to pay per year; however these will usually be on a percentage basis, so multiple polices may not necessarily mean higher charges in real terms.

What next?
It is recommended that when you consider multiple pension plans you should try to create an image of what you want when you retire, and this should help you determine whether you need more than one pension. However there are still many other things that should be considered and pensions are not so straight forward, so speaking to a financial adviser can be key. Most occupational pension schemes will see your employer provide an adviser to help you decide what sort of pension would be most suitable for your wants and needs, and age plays a big part here too – the younger you are, the more risk you can afford to place in a scheme, with potentially larger returns. For other types of pension it is recommended you seek advice, as no matter how much knowledge you have, there is always someone to help.

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