Personal pensions

What is a personal pension?

Personal pensions are often available as workplace pensions. They can also be taken out by people who don’t currently have a scheme through work or who are self-employed.

Some people choose to pay into a personal pension as well as a workplace pension. They do this to give themselves a bigger income when they retire.

How do they work?

All personal pension schemes are defined contribution schemes. They are a contract between you and the pension provider. Your personal pension has nothing to do with your employer, even if your employer pays contributions into the pension scheme (for example, through a workplace pension scheme).

Read our information on the new rules from April 2015 that allow more flexible access to your savings from the age of 55.

You can normally make regular or lump sum payments into your personal pension scheme. You pay these to your pension provider.

Your pension provider should send you a benefit statement every year. This tells you how much your pension pot is worth and gives you an estimate of how much pension you will get. Your pension pot is the total amount you have saved into your pension scheme.

If you are enrolled in a personal pension scheme through your employer, your pension payments will be automatically taken out of your salary like a workplace pension. Your employer will also make payments into your pension scheme.

If you leave your job or change to another personal pension, you may be able to transfer your pension savings to another scheme or keep paying into the old scheme.

Reducing your hours or stopping work

When you are affected by cancer, you may have to take time off work or stop work altogether.

  • If you use your holiday allowance to take time off, your pension won’t be affected. Once you have used your allowance, your pension may be affected.
  • If you are getting sick pay, you could continue to pay into your pension as normal, but this is not always the case. Nearly everyone with an employer gets at least 28 weeks of sick pay during a period of illness.
  • If you reduce your working hours and are paid less, this is likely to reduce the workplace pension you are building up.

In any of these situations, exactly what happens depends on your work contract and the rules of the pension scheme.

To check if your pension will be affected by time off or reduced hours, talk to your employer, the HR department at work, or the pension scheme manager.

If you stop working

If you stop paying money into it, your final pension will be smaller.

Check whether your personal pension came with insurance that continues to pay your contributions if you can’t work because of illness. This is called pension contribution protection benefit or a waiver of premium benefit. You should also check for life insurance as some older pension schemes will provide it too.

To check the rules and options for a personal pension, read the scheme’s policy document or talk to the provider.

We have more information about coping with the impact of cancer on work. It also has tips on talking about cancer in the workplace.

Retirement and accessing your pension benefits

Your chosen retirement age can be any age from 55 onwards. You are usually able to choose the retirement age you would like to take your pension benefits from, but you can change this at a later date. You can decide to take your pension earlier or later than your chosen retirement age. But you cannot take your pension before age 55, unless this is due to ill health.


All personal pensions are defined contribution schemes. See our section on defined contribution schemes for information on accessing your benefits.